[House Hearing, 112 Congress] [From the U.S. Government Printing Office] ENSURING REGULATIONS PROTECT ACCESS TO AFFORDABLE AND QUALITY COMPANION CARE ======================================================================= HEARING before the SUBCOMMITTEE ON WORKFORCE PROTECTIONS COMMITTEE ON EDUCATION AND THE WORKFORCE U.S. House of Representatives ONE HUNDRED TWELFTH CONGRESS SECOND SESSION __________ HEARING HELD IN WASHINGTON, DC, MARCH 20, 2012 __________ Serial No. 112-54 __________ Printed for the use of the Committee on Education and the Workforce Available via the World Wide Web: www.gpo.gov/fdsys/browse/ committee.action?chamber=house&committee=education or Committee address: http://edworkforce.house.gov ---------- U.S. GOVERNMENT PRINTING OFFICE 73-150 PDF WASHINGTON : 2012 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, Washington, DC 20402-0001 COMMITTEE ON EDUCATION AND THE WORKFORCE JOHN KLINE, Minnesota, Chairman Thomas E. Petri, Wisconsin George Miller, California, Howard P. ``Buck'' McKeon, Senior Democratic Member California Dale E. Kildee, Michigan Judy Biggert, Illinois Robert E. Andrews, New Jersey Todd Russell Platts, Pennsylvania Robert C. ``Bobby'' Scott, Joe Wilson, South Carolina Virginia Virginia Foxx, North Carolina Lynn C. Woolsey, California Bob Goodlatte, Virginia Ruben Hinojosa, Texas Duncan Hunter, California Carolyn McCarthy, New York David P. Roe, Tennessee John F. Tierney, Massachusetts Glenn Thompson, Pennsylvania Dennis J. Kucinich, Ohio Tim Walberg, Michigan Rush D. Holt, New Jersey Scott DesJarlais, Tennessee Susan A. Davis, California Richard L. Hanna, New York Raul M. Grijalva, Arizona Todd Rokita, Indiana Timothy H. Bishop, New York Larry Bucshon, Indiana David Loebsack, Iowa Trey Gowdy, South Carolina Mazie K. Hirono, Hawaii Lou Barletta, Pennsylvania Jason Altmire, Pennsylvania Kristi L. Noem, South Dakota Marcia L. Fudge, Ohio Martha Roby, Alabama Joseph J. Heck, Nevada Dennis A. Ross, Florida Mike Kelly, Pennsylvania Barrett Karr, Staff Director Jody Calemine, Minority Staff Director ------ SUBCOMMITTEE ON WORKFORCE PROTECTIONS TIM WALBERG, Michigan, Chairman John Kline, Minnesota Lynn C. Woolsey, California, Bob Goodlatte, Virginia Ranking Member Todd Rokita, Indiana Dennis J. Kucinich, Ohio Larry Bucshon, Indiana Timothy H. Bishop, New York Trey Gowdy, South Carolina Mazie K. Hirono, Hawaii Kristi L. Noem, South Dakota George Miller, California Dennis A. Ross, Florida [Vacant] Mike Kelly, Pennsylvania C O N T E N T S ---------- Page Hearing held on March 20, 2012................................... 1 Statement of Members: Walberg, Hon. Tim, Chairman, Subcommittee on Workforce Protections................................................ 1 Prepared statement of.................................... 3 Woolsey, Hon. Lynn, ranking member, Subcommittee on Workforce Protections................................................ 5 Prepared statement of.................................... 6 Statement of Witnesses: Dombi, William A., vice president for law, National Association for Home Care & Hospice........................ 54 Prepared statement of.................................... 56 Esterline, Wynn, franchise owner, Home Instead Senior Care... 30 Prepared statement of.................................... 31 Leppink, Nancy J., Deputy Administrator, Wage and Hour Division, U.S. Department of Labor......................... 8 Prepared statement of.................................... 11 Ruckelshaus, Cathy, legal co-director, National Employment Law Project................................................ 39 Prepared statement of.................................... 41 Woodard, Marie, on behalf of her parents, Walter and Margaret Esselman................................................... 35 Prepared statement of.................................... 37 Additional Submissions: Mr. Dombi: Letter with appendices, dated March 21, 2012, from Mr. Dombi to Mary Ziegler, U.S. Department of Labor........ 88 Chairman Walberg: Survey, ``Economic Impact of Eliminating the FLSA Exemption for Companionship Services,'' Internet address to............................................. 3 The National Federation of Independent Business (NFIB), prepared statement of.................................. 69 Ms. Woolsey: Letter, dated March 6, 2012, from supporters of the Department of Labor's proposed regulation.............. 64 The American Federation of State, County and Municipal Employees (AFSCME), prepared statement of.............. 66 Letter, dated March 6, 2012, from Caring Across Generations (CAG)...................................... 72 Letter, dated March 19, 2012, from various communities of faith.................................................. 73 Letter, dated March 20, 2012, from various home care employers.............................................. 73 The Paraprofessional Healthcare Institute (PHI), prepared statement of........................................... 74 Letter, dated March 20, 2012, from various Jewish support organizations.......................................... 76 Advertisement, www.justice.org........................... 77 ``Private-Duty Industry Association Studies of DOL's Proposal to Revise FLSA's Companionship Exemption: What Do They Tell Us?'' policy paper, dated March 19, 2012, Paraprofessional Healthcare Institute (PHI)............ 78 ENSURING REGULATIONS PROTECT ACCESS TO AFFORDABLE AND QUALITY COMPANION CARE ---------- Tuesday, March 20, 2012 U.S. House of Representatives Subcommittee on Workforce Protections Committee on Education and the Workforce Washington, DC ---------- The subcommittee met, pursuant to call, at 10:02 a.m., in Room 2175, Rayburn House Office Building, Hon. Tim Walberg [chairman of the subcommittee] presiding. Present: Representatives Walberg, Goodlatte, Woolsey, and Kucinich. Staff present: Katherine Bathgate, Press Assistant/New Media Coordinator; Casey Buboltz, Coalitions and Member Services Coordinator; Ed Gilroy, Director of Workforce Policy; Benjamin Hoog, Legislative Assistant; Marvin Kaplan, Workforce Policy Counsel; Ryan Kearney, Legislative Assistant; Donald McIntosh, Professional Staff Member; Krisann Pearce, General Counsel; Molly McLaughlin Salmi, Deputy Director of Workforce Policy; Linda Stevens, Chief Clerk/Assistant to the General Counsel; Alissa Strawcutter, Deputy Clerk; Joseph Wheeler, Professional Staff Member; Kate Ahlgren, Minority Investigative Counsel; Aaron Albright, Minority Communications Director for Labor; Tylease Alli, Minority Clerk; John D'Elia, Minority Staff Assistant; Celine McNicholas, Minority Labor Counsel; Richard Miller, Minority Senior Labor Policy Advisor; Megan O'Reilly, Minority General Counsel; Julie Peller, Minority Deputy Staff Director; Michele Varnhagen, Minority Chief Policy Advisor/Labor Policy Director; and Michael Zola, Minority Senior Counsel. Chairman Walberg. Good morning. It is time to get started here, and I would like to welcome our guests and thank our witnesses for being with us today. It is good to see you again, Deputy Administrator Leppink. We appreciate your participation in this hearing and the department's willingness to extend the comment period through tomorrow to accommodate our desire to submit relevant materials from this hearing into the rulemaking record. Before we begin today I would like to take a moment to express my sadness over the loss of one of our colleagues. For more than 20 years Congressman Donald Payne was a passionate and tireless advocate on behalf of the people of New Jersey's 10th congressional district. His presence on this committee, and in this body, and certainly in this--his district will be missed in Congress and on this committee, as well. I extend my heartfelt condolences to his family, his friends, his staff, as they mourn his passing and reflect on the achievements of his distinguished public service record. I would ask that we all honor his memory by observing a moment of silence at this time. Now we move to the issue before the subcommittee this morning. As they say, life goes on and challenges that are involved still continue, and so does our purpose to continue today in honor of our colleague, but also in honor of the service that we are called to perform. Today we will examine the Department of Labor's effort to narrow the long-standing companionship services exemption under the Fair Labor Standards Act. As we all know, the FLSA continues to serve as the foundation of federal wage and hour standards. Today's discussion is not about whether we stand by this important law more than 70 years after its enactment. The question before the subcommittee is whether the rules and regulations intended to enforce the law adequately reflect the policy decisions made by the people's elected representatives. Nearly 4 decades ago Congress amended the FLSA to extend its overtime and minimum wage requirements to domestic workers. However, policymakers recognized then the importance of ensuring seniors and individuals with disabilities have access to affordable in-home care. This support can often help a senior spend more years in the comfort of their own home or allow an individual with a disability to enjoy the independence afforded a life outside institutional care. Due to the vital role of in-home care in the lives of these individuals, in 1974 Congress created an exemption under FLSA for companion care workers. Through public rulemaking the department has since held the exemption extends to all companion care workers regardless of how they are employed, and this reasonable regulatory approach was unanimously upheld by the U.S. Supreme Court less than 5 years ago. Unfortunately, access to this critical support is threatened by a regulatory initiative introduced last December. Under the Labor Department's proposal only employees who follow a rigid set of arbitrary standards would qualify for an exemption. The proposed regulation would also eliminate the existing exemption for companion care workers employed by a third party as well as exemption for workers jointly employed by a third party and the individual receiving the care. The department's proposed regulation essentially overturns decades of companionship care policy. These changes run contrary to what Congress intended when it first established this important exemption nearly 4 decades ago. While I recognize the delivery of services has evolved over the years, the need to maintain access to affordable in-home care has not. As a result of this dramatic regulatory shift higher costs would inevitably ensue. In fact, the Labor Department estimates this proposal would increase the cost of in-home companion care from anywhere between $420 million to upwards of $2.3 billion over the first 10 years alone. And there is a great concern that this estimate is just the tip of the iceberg. A survey of companion care franchise businesses determined the department understated the extent of overtime work performed by employees and based a number of its underlying assumptions on incomplete data. The report finds, and I quote--``The Department of Labor has significantly understated some of the economic impacts that will result from the proposed changes in regulations.'' Without objection, I would like to insert this survey conducted on behalf of the International Franchise Association Educational Foundation into the record. And I hear no objection. [The survey, ``Economic Impact of Eliminating the FLSA Exemption for Companionship Services,'' dated Feb. 21, 2012, may be accessed at the following Internet address:] http://franchise.org/uploadedFiles/Franchise_Industry/Resources/ Education_Foundation/IHSGlobalInsightCompanionCareReport.pdf ______ Chairman Walberg. Understanding the true cost of a regulatory proposal that already carries a price tag of up to $2.3 billion is startling. Some have said the costs will simply be transferred from the employer to the worker and have no impact on the demand for services. Such a flawed understanding of basic economics ignores the reality that these costs will ultimately be paid by the consumer, whether senior citizen, taxpayer, family member, or individual with a disability. A cost rise, those who receive in-home care will be forced--excuse me--as costs rise, those who receive in-home care will be forced to confront difficult choices, such as accepting a diminished quality of care or relying upon institutional services outside the home. I have had an opportunity to hear the concerns of providers who reside in my congressional district as well as others located across the country. In fact, Michigan is already dealing with the consequences of these changes and I look forward to having one of my constituents give the committee a firsthand account of how the people of my home state are faring under this policy. The act of making responsible public policy often involves finding a balance between competing interests. Current policies that govern delivery of in-home companion care have served our nation well for nearly 40 years. The administration has a responsibility to provide a clear and compelling reason why that important balance must now be upset and a greater burden must be placed on some of our most vulnerable citizens. With that, I will now recognize the senior Democrat member of the subcommittee, Ms. Woolsey, from California, for her opening remarks? [The statement of Chairman Walberg follows:] Prepared Statement of Hon. Tim Walberg, Chairman, Subcommittee on Workforce Protections Good morning. I would like to welcome our guests and thank our witnesses for being with us today. It is good to see you again, Deputy Administrator Leppink. We appreciate your participation in this hearing and the Department's willingness to extend the comment period through tomorrow to accommodate our desire to submit relevant materials from the hearing into the rulemaking record. Before we begin, I would like to take a moment to express my sadness over the loss of one of our colleagues. For more than twenty years, Donald Payne was a passionate and tireless advocate on behalf of the people of New Jersey's 10th congressional district. His presence will be missed in Congress and on the committee as well. I extend my heartfelt condolences to his family, friends, and staff as they mourn his passing and reflect on the achievements of a distinguished public servant. I would ask that we all honor his memory by observing a moment of silence. [Moment of silence.] Thank you. Now, we move to the issue before the subcommittee this morning. Today, we will examine the Department of Labor's effort to narrow the long-standing companionship services exemption under the Fair Labor Standards Act. As we all know, the FLSA continues to serve as the foundation of federal wage and hour standards. Today's discussion is not about whether we stand by this important law more than 70 years after its enactment. The question before the subcommittee is whether the rules and regulations intended to enforce the law adequately reflect the policy decisions made by the people's elected representatives. Nearly four decades ago, Congress amended the FLSA to extend its overtime and minimum wage requirements to domestic workers. However, policymakers recognized then the importance of ensuring seniors and individuals with disabilities have access to affordable in-home care. This support can often help a senior spend more years in the comfort of their own home, or allow an individual with a disability to enjoy the independence afforded a life outside institutional care. Due to the vital role of in-home care in the lives of these individuals, in 1974 Congress created an exemption under FLSA for companion care workers. Through public rulemaking, the department has since held the exemption extends to all companion care workers, regardless of how they are employed, and this reasonable regulatory approach was unanimously upheld by the U.S. Supreme Court less than five years ago. Unfortunately, access to this critical support is threatened by a regulatory initiative introduced last December. Under the Labor Department's proposal, only employees who follow a rigid set of arbitrary standards would qualify for an exemption. The proposed regulation would also eliminate the existing exemption for companion care workers employed by a third-party, as well as the exemption for workers jointly employed by a third-party and the individual receiving care. The department's proposed regulation essentially overturns decades of companionship care policy. These changes run contrary to what Congress intended when it first established this important exemption nearly four decades ago. While I recognize the delivery of services has evolved over the years, the need to maintain access to affordable in- home care has not. As a result of this dramatic regulatory shift, higher costs would inevitably ensue. In fact, the Labor Department estimates this proposal would increase the cost of in-home companion care from anywhere between $420 million to upwards of $2.3 billion, over the first 10 years alone. And there is great concern that this estimate is just the tip of the iceberg. A survey of companion care franchise businesses determined the department understated the extent of overtime work performed by employees and based a number of its underlying assumptions on incomplete data. The report finds, ``The Department of Labor has significantly understated some of the economic impacts that will result from the proposed changes in regulations.'' Without objection, I would like to insert this survey conducted on behalf of the International Franchise Association Educational Foundation into the record. Understating the true cost of a regulatory proposal that already carries a price tag of up to $2.3 billion is startling. Some have said the costs will simply be ``transferred'' from the employer to the worker and have no impact on the demand for services. Such a flawed understanding of basic economics ignores the reality that these costs will ultimately be paid by the consumer, whether a senior citizen, taxpayer, family member, or individual with a disability. As costs rise, those who receive in-home care will be forced to confront difficult choices, such as accepting a diminished quality of care or relying upon institutional services outside the home. I have had an opportunity to hear the concerns of providers who reside in my congressional district, as well as others located across the country. In fact, Michigan is already dealing with the consequences of these changes, and I look forward to having one of my constituents give the committee a firsthand account of how the people of my home state are faring under this policy. The act of making responsible public policy often involves finding a balance between competing interests. Current policies that govern the delivery of in-home companion care have served our nation well for nearly forty years. The administration has a responsibility to provide a clear and compelling reason why that important balance must now be upset and a greater burden must be placed on some of our most vulnerable citizens. With that, I will now recognize the senior Democrat member of the subcommittee, Ms. Woolsey, for her opening remarks. ______ Ms. Woolsey. Well, Mr. Chairman, with the passing of Donald Payne I have personally lost a man that I loved and respected, a friend for life and a mentor. When I came to Congress I couldn't have asked for a better mentor--a public schoolteacher from New Jersey, someone kind and smart to help me be the best member of Congress I could be. I served on Congressman Payne's Africa Subcommittee; he served on my Workforce Protections Subcommittee. On both panels I benefitted from his wisdom, his advice, and his expertise and experience. This is a man who knew public service and knew what it was all about. He was, as he described himself, a well--a mild- mannered man, but he was also tenacious and he was dedicated. No one has worked harder to bring peace, democracy, and human rights to Africa. He almost gave his life for the cause a few years ago when his plane was shot by rebels as he prepared to come home after a Somalia mission that the State Department had warned him against--in fact, they told him not to go. As change continues, Mr. Chairman, in our world and in our own country I hope we will all remember the role that Donald Payne played in fearlessly protecting workers' rights and making education accessible and affordable for all. A true friend of working families and children, his death leaves an indescribable void. Donald Payne had a huge heart and a keen mind. I will miss both. And too, Mr. Chairman, will the nation's nearly 2 million home care workers, the overwhelming majority of whom are women and minorities who are currently excluded from federal minimum wage and overtime protections under the Fair Labor Standards Act. Home care workers help patients live in their homes and assist them with eating, dressing, bathing, preparing meals, medication management, light travel, and other services that are absolutely necessary to live independently. They are a productive workforce for a booming, profitable industry and deserve the basic minimum wage and overtime protections of the FLSA. The modern home care workforce performs a wide range of functions far exceeding the fellowship and protection services that Congress envisioned when this exemption was first created. The home care industry, on the other hand, makes profits of 30 to 40 percent in a $70 billion-a-year industry. However, the median annual wage for home care workers is under $20,000 a year, which has led to high turnover rates and increased employer costs that also affect the quality of care the client receives. To address this issue, the Department of Labor issued a proposed rule to extend minimum wage and overtime protections under the FLSA, providing basic wage and hour protections to a growing sector of the workforce and would put more money in the pockets of low-wage workers, which would in turn spur economic growth. This proposal discourages excessive overtime, which often leads to workplace injuries, illnesses, and fatigue. It would also likely result in a reduced reliance on public benefits because 40 percent of the workers affected by the proposed rule rely on programs like Medicaid and Food Stamps so that in reality the taxpayers make up the difference so the business owners can profit. Think about that: pay low, taxpayers make up the difference, businesses profit. Let's be clear: Nothing in this proposal requires an increase in the cost of providing home care services. What this proposal requires is that the individuals providing care be compensated fairly. I know that there are some who say that if we pay home health care workers a decent wage the elderly and disabled will not be able to afford in-home care. However, the issue threatening affordable quality home care is not paying minimum wage to home health workers providing care; it is promoting a business model that allows for the generation of $70 billion in annual profit on the backs of its workers, as many as 50 percent of whom rely on some form of public assistance to make ends meet. DOL analyzed the impact of this proposal on Medicare and Medicaid and found that it would have no direct effect on federal spending. Twenty-one states already provide some coverage under state minimum wage and overtime laws. These states demonstrate that it is possible to extend these critical protections in an economically responsible manner without disastrous consequences. In fact, Mr. Chairman, as you just said, your home state of Michigan already has minimum wage and overtime coverage for home care workers and has not--well, you didn't say this. You said they are not covered; I am saying not--have not seen an increase in the cost of these services nor any widespread unwanted institutionalization of elderly or disabled individuals. I am certain that by convening this hearing we are not suggesting that workers in your state be stripped of their current protection under Michigan law, so I hope that we can look forward to learning from the positive Michigan experience and hearing from today's witnesses. Thank you, Mr. Chairman. [The statement of Ms. Woolsey follows:] Prepared Statement of Hon. Lynn C. Woolsey, Ranking Member, Subcommittee on Workforce Protections Mr. Chairman, the nation's nearly 2 million home care workers, the overwhelming majority of whom are women and minorities, are currently excluded from federal minimum wage and overtime protections under the Fair Labor Standards Act (FLSA). Home care workers help patients live in their homes and assist them with eating, dressing, bathing, preparing meals, medication management, light travel and other services. They are a productive workforce for a booming, profitable industry and deserve the basic minimum wage and overtime protections of the FLSA. The modern home care workforce performs a wide range of functions far exceeding the fellowship and protection services that Congress envisioned when this exemption was first created. The home care industry on the other hand makes profits of 30 to 40 percent in a $70 billion a year industry. However, the median annual wage for home care workers is under $20,000 a year, which has led to high turnover rates and increased employers' costs that also affect the quality of care the client receives. To address this issue, the Department of Labor issued a proposed rule to extend minimum wage and overtime protections under the FLSA, providing basic wage and hour protections to a growing sector of the workforce and would put more money in the pockets of low-wage workers which would spur economic growth. This proposal discourages excessive overtime which often leads to workplace injuries, illnesses and fatigue. It would also likely result in a reduced reliance on public benefits---40 percent of the workers affected by the proposed rule rely on programs like Medicaid and food stamps so in reality, the taxpayers make up the difference so the business owners can profit. Let's be clear, nothing in this proposal requires an increase in the cost of providing home care services. What this proposal requires is that the individuals providing care be compensated fairly. I know that there are some who say that if we pay home health care workers a decent wage, the elderly and disabled will not be able to afford in- home care. However, the issue threatening affordable, quality home care is not paying minimum wage to home health workers providing care, it is promoting a business model that allows for the generation of billions of dollars in profit on the backs of its workers, as many as 40 percent of whom rely on some form of public assistance to make ends meet. DOL analyzed the impact of this proposal on Medicare and Medicaid and found that it would not have a direct effect on federal spending. 21 states already provide some coverage under state minimum wage and overtime laws. These states demonstrate that it is possible to extend these critical protections in an economically responsible manner without disastrous consequence. In fact, Mr. Chairman, your home state of Michigan already has minimum wage and overtime coverage for home care workers and has not seen an increase in the cost of these services nor has there been widespread unwanted institutionalization of elderly or disabled individuals. I'm certain that by convening this hearing, you are not suggesting that workers in your state be stripped of their current protections under Michigan State law, so I look forward to learning from the positive Michigan experience and hearing from today's witnesses. Closing I regret that the Committee chose to hold a hearing today questioning whether an industry that generates billions of dollars in profit each year can afford to provide basic wage and hour protections to its workforce. These workers enable our loved ones to remain in their homes and preserve their dignity and quality of life. These workers deserve basic minimum wage and overtime protections so that they can provide for their families with the same dignity and self- sufficiency they provide their clients. As Senator Kennedy said when discussing FLSA protections, ``no one who works for a living should have to live in poverty.'' Today we heard compelling testimony from Ms. Ruckelshaus clearly demonstrating the need for the Department of Labor's proposed regulation. All workers deserve a fair day's pay for a fair day's work. The home care workforce is no different. These workers, primarily women and minorities, do valuable work and deserve just compensation. It is essential that we extend FLSA protections to home health care workers. I would ask unanimous consent to submit for the record, a letter signed by 86 organizations in support of DOL's proposed rule and I'd also ask unanimous consent to submit a statement for the record from the American Federation of State, County and Municipal Employees. Thank you. ______ Chairman Walberg. I thank the gentlelady for clarifying, and we will have opportunity to hear who is right. [Laughter.] Ms. Woolsey. Well, you are right; I am left. [Laughter.] Chairman Walberg. That is true. That is true. And very quick for you to remember that. Well, that is why we have these hearings, and it is a personal thing to me, as well, having a mother who was able to stay on our farm for 3 additional years because of companionship care that was given. And thankfully my wife and I were--I should say my wife, especially, was capable of organizing that, but not all are, and so this is a key issue. My mother is 96 and now in a nursing home, and many more tax dollars are being used--it could be argued much of which she and my father put in the system for many systems for helping to pay for her. But it was our desire, certainly, to keep her at home as long as possible, and we are appreciative of companions who assisted in doing that. Pursuant to committee rule 7(C) all members will be permitted to submit written statements to be included in the permanent hearing record. And without objection, the hearing record will remain open for 14 days to allow questions for the record, statements, and extraneous material referenced during the hearing to be submitted for the official hearing record. We have two distinguished panels of witnesses today, and I would like to begin by introducing the first solitary panel: Deputy Administrator of Wage and Hour Division, Nancy Leppink, who is not unfamiliar to this committee, and we appreciate you being here again today in front of our committee. You don't need any instruction on the lighting system, and we certainly want to hear your testimony and then have opportunity for myself and Ms. Woolsey to question you, as well as any other committee members that may show up. One of your colleagues, Steven Chu, is just down the hallway here testifying before a committee that a number of us sit on as well. But we are intensely interested in what you have to say, so thank you for joining us and you may begin your testimony. STATEMENT OF NANCY J. LEPPINK, DEPUTY ADMINISTRATOR, WAGE AND HOUR DIVISION, U.S. DEPARTMENT OF LABOR Ms. Leppink. Thank you, Chairman. Good morning, Chairman Walberg, Ranking Member Woolsey, and members of the subcommittee. Thank you for the invitation to testify today about the department's notice of proposed rulemaking on the application of the Fair Labor Standards Act to domestic service. Under the department's current regulation federal minimum wage and overtime protections are denied to many of the almost 2 million in-home care workers, 92 percent of whom are women, 30 percent of whom are African American, and nearly 12 percent Hispanic. This fact received significant attention a few years ago when Evelyn Coke challenged the department's regulation all the way to the Supreme Court. Ms. Coke was the sole wage-earner and single mother of five. She had been an in-home care worker for over 20 years. She had bathed, fed, and cared for the elderly clients of her employer, working up to 70 hours per week with no overtime pay. The Supreme Court ruled against her, concluding that Congress delegated to the department the authority to define companionship services and to determine whether the companionship service exemption could be claimed by her third party employer. Given the changes and the growth in the in-home care service industry over the last 36 years since the department issued its rules, the persistently low wages of in-home care workers, and the critical importance of the work that they do, the department believes it appropriate to consider, under its current regulations, whether they are out of date and whether the application of the companionship services exemption is overly broad. The importance of this rulemaking is reflected by the thousands of comments we have received from workers, from employers, from individuals and families receiving in-home care services, from members of Congress, and many others. In 1974 Congress extended the act's minimum wage and overtime protections to domestic service workers employed by private households. It was Congress' intent that by extending the FLSA's economic protections to these workers those protections would raise not only their wages but would also raise the status of the work they performed. These amendments carved out a limited exemption for casual babysitters and individuals providing companionship. At the time, providing companionship to the elderly or infirm was commonly understood to be an avocation engaged in by family, friends, and neighbors, and the companions were not their family's breadwinners and, consequently, were not in need of the FLSA's protections. Since the department issued its regulations the demand for in-home care services has grown significantly due to a number of factors, including the increase in our aging population, the rising cost of traditional institutional care, the desire of individuals and their families to receive needed care in their homes, and the availability of funding under Medicare and Medicaid. As the industry has grown, and has continued to grow even in these difficult economic times, the employment of in- home care workers has also increased. This growth, however, has not translated into increased earnings for these workers. The earnings of employees working as home health and personal care aides remains among the lowest in the service industry. Further, demanding work coupled with low wages and irregular hours has resulted in high turnover, which means fewer experienced workers and a lack of continuity of care. In contrast to the companions Congress had in mind in 1974, workers who now care for our family members are employed in well recognized occupations and are often the sole wage-earners supporting their families. In-home care employees engage in difficult physical and emotionally taxing work, yet nearly 40 percent rely on Food Stamps or other forms of public assistance. Included among the ranks of these professionals were the in-home care workers who, at the announcement of the proposed rule, expressed their commitment to the work they perform but also expressed how difficult it is to support their families and how they would feel more economically secure with minimum wage and overtime protections--the security of a fair day's pay for a fair day's work. We are seeking to accomplish two important objectives by proposing amendments to our current rules: first, to more clearly define the services that may be performed by an exempt companion. The proposed rules would limit an exempt companion's services to fellowship and protection. It would continue to allow for certain incidental intimate personal care, such as occasional dressing and grooming, and activities such as driving to appointments, provided those services are attendant to the provision of companionship and do not exceed 20 percent of the total hours worked in a work week. The proposal would make clear that companionship services do not include medically related duties for which training is typically required. The proposed changes would ensure that companionship services only applies to those workers who are truly providing companionship. The proposed rules would also limit the exemption to companions employed by individuals or households using the companionship services--using the companionship services. Third party employers, such as in-home care service companies or staffing agencies, would no longer be permitted to claim the companionship services exemption. Protecting more in-home care service workers under the FLSA's minimum wage and overtime provision would align the companionship services exemption--beg your pardon to finish-- exemption with its original statutory purpose and would be an important step in ensuring that in-home care service industry attract and retains qualified workers. Evelyn Coke did not live to see the publication of this proposed rule, but it is with her and other hardworking in-home care service workers in mind the department is proposing these changes to ensure the FLSA is implemented as intended. I appreciate the opportunity to appear before this committee today. I value your input and the input of thousands--the thousands who have submitted comments, and when the comment period is closed we will carefully consider the comments that have been submitted, and I am glad to respond to any questions that you, Chairman, or the members of the committee have. [The statement of Ms. Leppink follows:]
``The Department of Labor's economic impact analysis of the proposed rule changes substantially understated the extent of overtime work among companion care workers, at least among those working for franchise-operated companion care businesses. The average amount of overtime worked is three times greater than estimated in the Department of Labor analysis.''
``Other costs of the proposed rule change may also be understated * * * including management costs of adding staff to avoid the cost of overtime pay (assumed zero) and the cost of travel time for employees travel between work sites.'' ``We believe the Department of Labor's assumption about the sensitivity of the demand for companion care services to price increases (the demand price elasticity) is based on incomplete data on the source of payment for these services and is, therefore, significantly understated.'' ``As a result of the underestimation of costs and the price elasticity, the Department of Labor has significantly understated some of the economic impacts * * * that will result from the proposed changes in regulations.'' ``The impact of the proposed rule changes on employment is less clear. Businesses that responded to our survey indicate a strong intention to avoid paying higher overtime costs, which may lead to sufficient hiring of additional employees to offset job loss due to reduced demand. To the extent this occurs, the effect of the proposed Department of Labor regulations may be to create a certain number of additional (primarily low-wage) jobs, while at the same time reducing the earnings of a substantial number of workers who are already low- wage workers.'' The 542 franchise business owners who supplied the survey data operate 706 locations in 47 states, representing a very broad cross- section of businesses. In general, these are small businesses--more than half reported revenue of less than $1 million and only 5 percent had revenue of more than $4 million. The typical--average--agency employs 75 to 85 employees. It is also important to note that about 80 percent of the agencies receive more than half of their revenue from companion care services. In addition, these agencies report that more than 83% of their employees are engaged in providing companion care services. The survey revealed a few other key findings: These business owners say that higher rates of overtime pay, increased numbers of workers, and larger administrative costs will force them to raise client fees by 20 percent or more. Ninety percent of these business owners say that higher fees will cause some of their clients--approximately 1 in 5 of their clients--to seek care from ``underground'' or ``grey market'', unregulated care givers. Ninety-five percent of the business owners operating in states without overtime regulations say they will eliminate all scheduled overtime--which will result in less income for thousands of low-wage companion care workers. Lastly, this survey report represents only those franchise businesses that are members of the International Franchise Association, and therefore, it may not be representative of the entire industry. In the IFA membership, there are 27 franchise companies in this sector, with an estimated 4,193 franchisees. The greatest impact of the Department of Labor's proposed rule changes would be on approximately 2,500 of these businesses, which are located in states that currently do not require overtime pay to companion care workers. These businesses operate approximately 3,200 establishments (locations), with approximately 200,000 employees, including 168,000 companion care workers. When considering just this one segment of the companion care industry, the franchising sector, it is very apparent that the Department of Labor analysis has ``substantially understated'' the negative impact of the proposed rule changes on our businesses, on our clients, and on our employees. Conclusion I firmly believe that in-home companionship care should not be a luxury afforded only to those who are willing to violate the law in the unsafe ``grey market'' or the very wealthy who can afford to pay the increased cost that will result from these proposed changes. I hope that you will consider urging the Department of Labor to withdraw these proposed regulations. Thank you for giving me this opportunity to present my views. I would be happy to answer any questions you might have. ______ Chairman Walberg. Thank you, Mr. Esterline. Ms. Woodard, welcome. STATEMENT OF MARIE WOODARD Ms. Woodard. Chairman Walberg, Ranking Member Woolsey, and--members of the subcommittee, thank you. Thank you for giving me the opportunity to speak. My name is Marie Woodard and I am speaking on behalf of my parents, who received home care from 2004 to 2011 here in Virginia. We started aides with my father back in 2004 couple days a week to help him with bathing, showering--gradually increased to 10 hours a day. My mother had a heart attack in May of 2005 and we started with 24-hour care because she could no longer care for Dad. Our two main aides worked 5 to 6 days a week, 8 a.m. to 8 p.m., 8 p.m. to 8 a.m., so there were two shift changes a day and then on the weekends we had coverage aides. Dad died in March of 2008, and within 24 hours my mother was in intensive care unit dying so we just sent the aides that were with Dad the day before, ``Go now to the hospital and sit with Mom.'' So we had continuous care for all of that time. My primary concerns with the care of my parents was really the quality of the care and the consistency of the care. My father had Parkinson's disease, which caused him difficulty in swallowing, so the consistency of the aide being there to feed my father was so important because she was familiar with him, she knew him, she was not afraid to feed him because he would choke and cough. So the exact feeding regime had to be followed, where his liquids had to be thickened, his foods had to be pureed, he had to eat in a sitting up position. All of this was very, very important, and my father became very anxious if he knew another aide was going to feed him because he was afraid of choking, too. Another concern with my mother--my mother had heart failure. Again, we needed someone consistently to watch my mother for those subtle changes that come with heart failure. With heart failure you are on a fine line. If you give them too much fluid it overloads the heart and they go into heart failure; if you give them too little their blood pressure drops, they get dehydrated, and they faint and they fall. So we were on that fine line every day as my mother managed it herself while she was well, now the aide would remind her, ``Weigh yourself every day; take your blood pressure,'' and I would call every day and get those results and kind of weigh what we would do with Mom that day as far as her fluid pills and whether we needed to call the doctor to keep her out of the emergency room. With the heart failure there was also very subtle changes that you needed to watch with my mother, where if she would cough that wouldn't mean anything, but with my mom it could mean that fluid was building up in her lungs and we needed to act on that cough right away and start looking at her fluid buildup. So the consistency of the aide really kept both my parents out of the hospital, kept my father from developing aspiration pneumonia from choking on his food, and kept my mother from developing severe heart failure, which would cause her to be hospitalized. Another primary concern was the emotional issues. It is very hard to have someone to come in and care for you in your home. It is a very personal thing. My mother and father would become anxious about an hour to an hour-and-a-half before shift change: Who was coming? Did they know her? If they didn't know her, did she know what she was doing? They became afraid to the point where they would either hang onto me if I was there or to the aide that was there begging us not to leave, and don't leave us with that person. My mother even, at one night, snuck off to the phone at 3 o'clock in the morning and dialed 911 that the aide did not know about and told the police there was a stranger in her house and to hurry over and help her quickly. When the police knocked on the door, of course they found the aide that I had hired and called me at 3 o'clock in the morning and I said yes, indeed I did hire her. So the consistencies of the aides really allowed my parents to be calm and have a trust and a bonding relationship with these aides. The financial aspect of it, it was--over the 7 years it cost my family and my parents over $1 million to provide this care. None of this care was covered by Medicare, Medicaid, or long-term care insurance; this was totally out-of-pocket. Of course, they had Medicare but it couldn't be covered by Medicare because it is not skilled care, it was custodial care. Our family was really fortunate to be able to give our parents exactly what I think everybody in this room would want for your parents, would want for ourselves when we get sick-- the ability to stay in your own home as long as possible, to stay with your family, to stay with your spouse, not to be separated from your spouse, to stay out of the hospital, to be able to have care in your home, have somebody to assist your family in your home, to know that the caregiver--you can trust them, they are familiar with you, they know you, and that they are there to care for you. And to die in your own bed. Every one of--you know, wish that they have the opportunity to be in your own home, to be in your own bed at the time of death. And also, for this care to be affordable. If we had had to pay overtime to our aides with the 12 hours a day our family would have had to make hard choices. Were we willing to pay that additional cost? Could we financially pay that additional cost? What would the impact be on my parents having aides come for three shifts a day? So just the--yes. Chairman Walberg. Wrap up your comments quickly here. Ms. Woodard. Okay. Chairman Walberg. Time is expired. Ms. Woodard. Okay. So I just would like you to consider the consumer and the family member in any decisions that you make. Thank you. [The statement of Ms. Woodard follows:] Prepared Statement of Marie Woodard, on Behalf of Her Parents, Walter and Margaret Esselman Mr. Chairman and Members of the Subcommittee, thank you for allowing me to testify today. My name is Marie Woodard and I am testifying on behalf of my family and my parents who received personal care from aides in their home from 2004 to 2011. My parents were both healthy and active until their mid eighties. My father had Parkinson's disease and Alzheimer's and required home care starting in 2004. We started with having a privately hired aide come 3 days a week to his home for bathing and dressing. As the needs changed, the care progressed to daily aide care 10 hours a day and we hired aides through a private duty agency. In May 2005 my mother had a heart attack and was hospitalized and my father could not be left home alone. We started 24 hour home aide care services in May 2005. My father required 24 hour care until his death in March 2008. Within 24 hours of my father's death my mother was in ICU with pneumonia and not expected to live. Our family was in turmoil arranging for my father's funeral while our mother was dying. We were blessed to have our mother survive this illness but the recovery was extensive and lengthy. We continued to have aides provide one on one care to my mother as she progressed from the hospital to the nursing home then back to her home. We were so fortunate to have the same aides who had cared for Dad now caring for Mom. My mother developed dementia during this illness in addition to her severe heart failure and she required 24 hour care from March 2008 until her death October 2011. I was one of four children, but I was the only child living in Virginia and was very involved in the care of my parents. My parents had consistent aides who worked 12 hours a day for anywhere from 5 to 6 days a week. The aides changed shifts at 8am and 8pm. The day aide, Memunah, worked 6 days a week 12 hours a day from 8am to 8pm. Night care was provided by Harriet, who worked 5 days a week from 8pm to 8am. Their days off were on the weekend and were covered by other aides. During these seven years I had three major concerns coordinating and supervising the care of my parents. These concerns were the quality of the care my parents received, their comfort level with the aides providing care, and that emotionally my parents could adjust to having the aides with them 24 hours a day. As we began the care in 2004 on a part-time basis the cost of the care was a concern but we had no idea that this care would continue for the next seven years and our out of pocket expenses for this care would be a million dollars. Consistency of aides was so important for the quality of care provided my parents. A new aide assigned would require a great deal of teaching and intervention by me to assure that my parent was well cared for. I needed to instruct each aide with the individualized needs of each parent. My parents had unique needs due to their diseases, levels of confusion and anxiety as well as the day to day needs--medication reminders, fall prevention, choking risks related to the Parkinson's Disease, emergency actions to take for medical emergencies that occurred during that 7 years--injuries related to falls, kidney failure, chest pains, heart attacks, episodes of aspiration pneumonia and difficulty breathing. The consistent care provided by the aide and their constant supervision of my parents prevented many hospitalizations and emergencies room visits. My father had Parkinson's disease that caused difficulty in swallowing. To prevent my father from choking, he had to be carefully fed to prevent him from aspirating and developing pneumonia. His feeding regime was very detailed and needed to be strictly followed. It was required that all his food and liquids be thickened, that all food have the right consistency, that he be fed slowly, be closely observed and that he be sitting up and was to never feed himself. I spent hours teaching the aides to properly feed my father. Having the same aide feeding my father most of the time assured that my father would not choke and develop pneumonia. The weekday aides were very skilled in feeding my father due to their familiarity with him and his illness. With my mother's severe heart failure I taught the aides to observe carefully for signs of impending heart failure crisis--the aides took my mother's blood pressure and weight every day and observed her difficulty breathing, shortness of breath, coughing and swelling of the legs and lower back. This was reported to me daily and with this information I and her doctor managed her heart failure on a daily basis to prevent hospitalizations. This required a level of skill on the aide's part, my trust in the aide, and the aide being with my mother on a daily basis to note subtle changes. My trust in the aides and their consistency relieved my anxiety knowing that the aide caring for my parent was familiar with them and knew how to care for both of them and to manage their medical needs. The consistency of the aides allowed my parents to become comfortable with them. It was very difficult for my parents to accept care in their home. My mother wanted to be the sole caregiver of my father and was very resistant to ``outside'' help. Emotionally for both my parents they saw the need for an aide as the loss of their vitality, lifestyle and independence. Both my parents had a great deal of trouble adjusting to the aides and I would estimate that adjustment period took over 12 months as they progressed from aides short term during the week to 24 hour care. The realization that the 24 hour care was permanent was devastating to them both as they accepted their frail health. As they got to know the aides they relaxed a little, but at each shift change my mother became anxious asking who was coming and begging the current aide on duty to stay and not leave her or my father. This anxiety was heightened greatly when an aide was coming that she did not know. If a new aide was assigned I called to discuss the care plan with them as well as went over to see my parents--as much to ease my mother's anxiety and my own anxiety having an unknown aide. We were fortunate that the shift change was only twice a day so the care was consistent and my parents developed a level of trust with the aides. I strongly believe that without the consistency of the aides working 12 hour shifts and knowing my parents and their illnesses so well that they would have died years earlier. Both weekday aides worked with my parents for many years, Harriet the night aide cared for my parents for over 6 years. The financial cost of the care provided to my parents was a burden to my parents and the family. The average costs for long-term care in the United States (in 2010) are: $205 per day or $6,235 per month for a semi-private room in a nursing home $229 per day or $6,965 per month for a private room in a nursing home $3,293 per month for care in an assisted living facility (for a one-bedroom unit) $21 per hour for a home health aide $19 per hour for homemaker services $67 per day for services in an adult day health care center Source: www.longtermcare.gov/LTC/Main_Site/index.aspx. National Clearinghouse for Long-Term Care Information website. The U.S. Department of Health and Human Services. Example: $21.00 per hour for a home health aide is $504.00 per day for 24 hour care or $183,960 per year. Since we started home care in 2004 the cost per hour was less but still our family paid over $1 million dollars for the care provided to our parents from 2004 to 2011. This was totally out of pocket expenses since Medicare does not cover this type of care and my parents did not have Long Term Care Insurance. The additional cost of overtime pay would have caused an additional financial burden to my parents and our family. The majority of Americans want to age at home and to stay at home rather than go into a facility. It is important to keep this home care affordable and to ensure consistency of care. When the cost of overtime pay is passed onto the consumer it will force the patient and their family to compromise the quality of care and have multiple aides in their home as well as multiple shift changes per day. The multiple shift changes per day would be very disruptive--I can imagine my parents refusing to go to bed until 11pm to let the night aide into the house. The increased cost may force families to choose care in a facility rather than providing the care in the home. My family was fortunate to be able to abide by my parents wishes to receive excellent care, stay in their own home, to be cared for by caregivers who cared for them as if they were their own mother and father, and to be able to die in their home. It was heart wrenching to watch my parents as they aged and became ill, I can only imagine how hard our lives would have been if we were forced to place them in a nursing home. Having the same aides care for my parents allowed the family the comfort of knowing that our parents were well cared for and when both my parents died at home they were treated with dignity and respect by their beloved aides. The aides were so close to my parents that they also grieved with us as if they had lost their own mother and father. ______ Chairman Walberg. Thank you, Ms. Woodard. Ms. Ruckelshaus? STATEMENT OF CATHY RUCKELSHAUS, LEGAL CO-DIRECTOR, NATIONAL EMPLOYMENT LAW PROJECT Ms. Ruckelshaus. Yes. Chairman Walberg, Ranking Member Woolsey, and members of the committee, thank you for this opportunity to testify today. My name is Cathy Ruckelshaus and I am the legal co-director of the National Employment Law Project, a nonprofit based in New York that seeks to ensure good jobs and economic security for our nation's workers. My remarks will highlight two primary areas from my written testimony but I am, of course, happy to answer any questions based on what I have submitted. First, I will briefly describe the working conditions of workers who provide the care and services to the older adults and persons with disabilities. Because the jobs are so low-paying turnover is high, creating dangerous shortages during a time of increasing demand. These are the workers I have represented or advocated for and come to know over the years. And I will end by touching briefly on the experiences we know about in the states where there is a wage floor for these jobs. The workers in my practice--I have met many home care workers who care for elderly and disabled individuals. I have also had the opportunity to meet some here at the hearing today. I am going to just give you two examples. Josefina Montero is a client of mine who is a home care worker who cares for adults and people with disabilities in the New York City region. She was paid the minimum wage, now $7.25 an hour, but not overtime by her agency. She takes care of all of her patients needs, including changing their diapers, feeding them, helping them take their medications, and accompanying them to appointments. Another set of former clients include Anna Thomas, Tracey Dennis, Renee Johnson, and Marilyn Jackson, all from the Philadelphia area who worked in home care. They bathed, fed, dressed, and cleaned for their clients. They assisted with catheter care and transfers and they administered medications. These workers were paid $5.15 an hour, the then minimum wage, but were not paid for the time they spent traveling between their clients by bus or by car. Their pay dropped below the minimum wage. Kara Glenn is another worker I have encountered. She makes $8.45 an hour after 30 years in the industry. She said, ``I stayed working because of the clients. I liked them and they liked me. We made our own little family and that meant more to me than the money. As long as they were getting good care that was really what mattered to me. When you are taking care of somebody you want to do your best and you don't want to leave them but sometimes you have got to because you need money to survive. You can't escape that.'' None of these workers have jobs that pay enough to support them. They have had difficulty making ends meet for their families. They are eligible for Welfare and many have taken jobs to supplement their earnings. And they are typical. The average national wage of $9.34 an hour, which is $18,000 a year, means that one in five lives below the poverty line. In 29 states the average hourly wages are low enough to qualify them for Welfare. These jobs are paid for by Medicaid, Medicare, and other public sources, which fund approximately 89 percent of the care. Many of these jobs require the same training as certified nurse's aides who work in nursing homes. The only difference between the two sets of workers is that those in nursing homes do get minimum wage and overtime and those providing care and services in the homes do not. What do we know about how this might play out were these rules to be implemented? It is not a zero sum game where consumers win or the workers win. The states where there is coverage have seen that the programs have thrived and the quality of care has not dropped. As we have heard this morning, 15 states already extend minimum wage and overtime protections to some or all home care workers. This includes Michigan, New Jersey, Minnesota, and states with some of the nation's largest home care programs, including New York, Illinois, and Pennsylvania. These states' experiences illustrate the economic feasibility of providing basic protections to home care workers. Some advocates and employers argue that the only way an individual can get continuity of care is to have only one worker for all needed hours. Requiring one worker for 24/7 care is not a good model for anyone. The worker at these low wages cannot sustain this kind of work, and that has related to--that has resulted in high turnover, which does not support continuity of care for anybody. And I just wanted to mention what Secretary Leppink mentioned. There are a couple of myths out there that I am happy to address in questions. Live-in arrangements will not be drastically altered under the proposed federal rule. The employers of live-in workers are still permitted to enter into agreements with their workers to not pay for sleep time. And finally, these proposed changes come at a critical time. Over the next 2 decades the population over 65 will grow to more than 70 million. An estimated 27 million Americans will need direct care by 2050. If recruitment and retention problems grow due to the low wages labor shortages could fail to meet the growing need. Thank you for inviting me to testify, and I look forward to any questions. [The statement of Ms. Ruckelshaus follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] ------ Chairman Walberg. Now we will move to Mr. Dombi? Is your microphone on? STATEMENT OF WILLIAM A DOMBI, NATIONAL ASSOCIATION FOR HOME CARE AND HOSPICE Mr. Dombi. Good morning, Chairman Walberg, Ranking Member Woolsey, and members of the Subcommittee on Worker Protection. Thanks for the opportunity to testify at today's hearing. The subject of the hearing is of crucial importance to the provision of home care to our nation's elderly and people with disabilities. The U.S. Department of Labor has proposed changes in overtime compensation exemptions that would effectively eliminate the application of those exemptions for home care services. There has been no change in the law mandating these revisions. In fact, the rules that are subject to change have been in effect for nearly 40 years. The proposed rule raises several legal and factual concerns. First, the proposed redefinition of ``companionship services'' is in direct conflict with the language of the Fair Labor Standards Act as well as its legislative history. Specifically, the FLSA applies the exemption to employees providing companionship services for individuals who, because of age or infirmity, are unable to care for themselves. This exemption relates to care, not fellowship, which is the proposal from the department, a term which is not referenced anywhere in the law. In 1973 Senator Taft noted that the services are directed to caring for the elderly in their homes to avoid nursing home placement. Senator Burdick further noted that the exemption applies for services to the aged and infirm that needs someone to take care of them. Fellowship is not care and does little or nothing to keep people out of nursing homes. Second, excluding employees of third party employers from the application of the exemption is in direct contradiction to the language of the FLSA as well as the position advanced by the Department of Labor at the U.S. Supreme Court. The law applies the exemption to any employer. The department relied on this language in defending its current regulations before the Supreme Court in 2007. The exemption is not limited to the infirm that have the wherewithal and financial capabilities to take on the difficult tasks required of employers. Third, the proposed rules have existed essentially in this same form since 1975's original rulemaking. Congress has had many opportunities to change the law in line with the defendant's--the department's proposal. Where Congress does not find sufficient reason to change the law over 36 years, the legal validity of the current proposal is called into serious question. Finally and perhaps most importantly, the analysis by the Department of Labor regarding the likely impact of the proposed rules falls far short of the analysis required under the Small Business Regulatory Flexibility Act and other federal law. While the department offers a very lengthy impact report it has several major failings at its core. Given the potential impact of the proposal, the department should be held to a very high standard of accuracy and completeness in its impact analysis. The analysis misses completely one of the most significant forms of home care--privately purchased personal care. Estimates fall short of 5 to 7 percent from the department's analysis, yet our own analysis shows that several million elderly people with disabilities as well, as well as those non- elderly with disabilities receive such care through over 20,000 companies across the country with an estimated $30 billion in annual expenditures. The impact analysis is also devoid of any evaluation of live-in services. This unique segment of home care is virtually all on a private pay basis. The impact on live-in care and caregivers cannot simply be assumed by using Medicare data or even the limited but unrelated data from Medicaid home care. The major weakness in the department's analysis is also its great reliance on Medicare data, which funds virtually none of the companion services at issue in this rule. Less than 6 percent of Medicare home health spending applies to home health aides, most of whom don't even qualify for the companionship services exemption. Medicaid, a much larger public purchaser of personal care, has no uniform data even to conduct the analysis to understand impact. We have conducted our own study of the impact of the proposal and we have looked at private pay as well as public programs, and the conclusions are that there will be moderate to significant increases in care costs; restrictions in overtime hours to the detriment of workers' overall compensation; loss of service quality and continuity; and increased costs passed on to patients and public programs that would result in the decreased service utilization, increase use of unregulated grey market services where quality of care is in jeopardy, and increased institutional care utilization rather than absorbing and covering the higher cost of care. Further, an additional analysis by Navigant Economics confirms that the department fell far short of the depth and accuracy needed to produce the mandated impact analysis to protect the public from harmful policy changes. We are prepared to share all of that analysis with this committee and we will be doing so with the Department of Labor, as well. I would close with one remark: The Department of Labor essentially qualified the proposed rule as inconsequential financially, at the same time characterizing the rule as so important to the workforce and so important to the elderly consumer of the services that it had to be done now. I think the department really needs to go back to the drawing board and examine true impact, and they have that opportunity--a rare opportunity. Given the 16 states that have overtime compensation, they can do a thorough review of what the impact has been in those 16 states as the transition occurred to determine much better than the assumptions and speculation that they used to determine the impact of this proposed rule just by looking at raw data. Thank you for the opportunity to testify, and I would take any questions that you might have. [The statement of Mr. Dombi follows:] Prepared Statement of William A. Dombi, Vice President for Law, National Association for Home Care & Hospice Good morning Chairman Walberg, Ranking Member Woolsey, and members of the Subcommittee on Worker Protections. I am William A. Dombi, Vice President for Law at the National Association for Home Care & Hospice. Thank you for the opportunity to testify at today's hearing. The subject of today's hearing is of crucial importance to the provision of home care to our nation's elderly and people with disabilities. The U.S. Department of Labor has proposed changes in overtime compensation exemptions that would effectively eliminate the application of the exemptions for home care services. Specifically, the proposed rule would redefine ``companionship services'' to limit the application of the exemption to primarily ``fellowship.'' Also, the proposed rule would eliminate any application of the companionship services and live-in exemptions where the worker is employed by a third party. There has been no change in the law mandating these revisions. Further, these rules have been in effect for nearly 40 years. The proposed rule raises several legal and factual concerns. First, the proposed redefinition of ``companionship services'' is in direct conflict with the language of the Fair Labor Standards Act as well as its legislative history. Specifically, the FLSA applies the exemption to employees providing ``companionship services for individuals who (because of age or infirmity) are unable to care for themselves.'' This exemption relates to care, not ``fellowship'' a term never referenced in the law. In 1973, Senator Taft noted that the services are directed to caring for the elderly in their homes to avoid nursing home placement. Senator Burdick further noted that the exemption applies for services to the aged and infirm that needs someone to take care of them. ``Fellowship'' is not care and does little or nothing to keep people out of nursing homes. Second, excluding employees of third-party employers from the application of the exemption is in direct contradiction to the language of the FLSA and the position advanced by the Department of Labor at the US Supreme Court in Long Island Care at Home v. Coke. The law applies the exemption to ``any employee.'' The Department relied on this language in defending its current regulations at the Supreme Court in 2007. The exemption is not limited to the infirm that have the wherewithal and financial capabilities to take on the difficult tasks required of employers. Third, the proposed rules have existed essentially with identical standards since the original rulemaking proceeding in 1975. Congress has had many opportunities to change the law in line with the Department's proposal. Where Congress does not find sufficient reason to change the law over 36 years, the legal validity of the current proposal is called into serious question. Finally, the analysis by the Department of Labor regarding the likely impact of the proposed rules falls very far short of the analysis required under the Small Business Regulatory Flexibility Act, the Paperwork Reduction Act, and Executive Orders 12886 and 13563. While the Department offers a lengthy impact report, it has several major failings at its core. Given the potential impact of the proposal, the Department should be held to a very high standard of accuracy and completeness in its impact analysis. The analysis misses completely one of the most significant forms of home care--privately purchased personal care. It is estimated that several million elderly and persons with disabilities use such care through 20,000 companies with an estimated $25-30 billion in annual expenditures. The Department's impact analysis is also devoid of any evaluation of live-in services. This unique segment of home care is virtually all on a private pay basis. The impact on live-in care and caregivers cannot be simply assumed by using Medicare data or even the limited, but unrelated data on Medicaid home care services. It is a service that is wholly different from any public program home care. The major weakness in the Department's impact analysis is the great reliance on Medicare data on home health services and other public reports on such care. However, only 6% of Medicare home health spending is on home health aides, the closest service to companionship care. Medicaid is a much larger public purchaser of personal care services through a variety of state specific programs. However, Medicaid data on the actual hours of care provided by personal care workers is virtually unavailable making an assessment of impact unreliable when using public data reports. NAHC has conducted a study of the impact of the proposal. This nationwide survey, including private pay home care and live-in services providers, indicates the following adverse impacts: 1. Moderate to significant increases in care costs 2. Restrictions in overtime hours to the detriment of the workers overall compensation 3. Loss of service quality and continuity 4. Increased costs passed on to the patients and public programs that would decrease service utilization, increase unregulated ``grey market'' care purchases, and increase institutional care utilization rather than absorbing and covering the higher cost of care. Further, an analysis by Navigant Economics confirms that the Department fell far short of the depth and accuracy needed to produce the mandated impact analysis sufficient to protect the public from harmful policy changes. Navigant Economics uncovered essential flaws and weakness in the Department's analysis, indicating that it would be prudent to re-initiate a comprehensive review before proceeding further with the proposed rule change. In conclusion, the Department of Labor's proposed rule significantly changes its longstanding policy. This proposal is in conflict with the language of the law and its legislative history. Also, the proposal fails to comply with requirements that the Department undertake a comprehensive and reliable impact analysis before issuing the proposal. Consumers, workers, small businesses, and public health care financing programs such as Medicaid all would be adversely affected by the proposal. ______ Chairman Walberg. Mr. Dombi, I thank you and each member of the panel. I appreciate your comments. I also want to take an opportunity as I see a number of caregivers in in attendance today, as well as administrators of caregiving organizations, and I would--having experienced some of that myself in caring for my mother, I want to say thank you. You are special people for what you do and the care you provide. Regardless of our discussions here related to law and how it goes on, we appreciate your services. Delighted to have the gentleman from Virginia, Mr. Goodlatte, here. I know that it is a scheduling issue and I would like to extend the opportunity now to recognize you for questioning. Mr. Goodlatte. Well, Mr. Chairman, thank you very much, and thank you for holding this hearing. And I also want to join you in thanking all of the caregivers and individuals who operate businesses that afford people the opportunity to hire good workers so they can keep family members at home and live at home. I also want to take the opportunity to recognize two of those folks who are here from my district, one of whom is a member of the Virginia General Assembly, and that is Delegate Chris Head and his wife Betsy, who are both here, and I thank them for the interest they have taken in today's hearing. I want to first direct my questions to Mr. Dombi and ask you if you could elaborate on your testimony that the department's rule directly conflicts with the language in the Fair Labor Standards Act and its legislative history. Can you explain your understanding of Congress' intent in enacting the companionship exemption, and can you please elaborate on how this rule conflicts with that intent and the language of the act? Mr. Dombi. Certainly. Start with the fact that the proposed rule redefines companionship services in a way that pretty much limits it to a concept called fellowship, which in this modern day and age sounds like Facebook, and eliminates, effectively, the definition as it relates to providing care to the elderly and infirm; whereas, the language in the law itself refers to care of the elderly and infirm, not fellowship, a concept which is not addressed--even referenced--in the legislative history or the statutory language. And in terms of any ambiguity regarding that, the legislative history, as I referenced in my testimony, from two of the proponents of the companionship services exemption, Senators Taft and Burdick, focused-in on caring for individuals to keep them out of the nursing home. So to take the proposed regulation, which effectively says no more than 20 percent of the time can be spent providing personal care to an individual, apply it to the elderly and infirm, who frankly aren't looking for a friend to watch TV with them, they are looking for assistance with activities of daily living, looking at the statutory language which focuses in on care not on fellowship, and the rule essentially guts the companionship exemption as intended by Congress back in 1974. The second part of it is relating to the application of the rule to third party employers, companies that provide the services. Most elderly and disabled really aren't going to be looking on Craigslist for finding caregivers; it is a dangerous effort in many respects, as well. Instead, they turn to third party agencies who do background screening and place people there who can competently meet needs. The statute itself regarding the exemptions references very specifically that it applies to any employee engaged in that type of service. The Department of Labor, at the Supreme Court in the Long Island Care at Home v. Coke case, very specifically argued that ``any employee'' means third party employers as well as people directly engaged in employment within the household. Mr. Goodlatte. I want to interrupt you because I want to direct one of the points you just made over to Mr. Esterline. I wasn't here for the testimony of the deputy administrator, but I understand that one of the questions from the gentlewoman from California related to the fact that the amount that is billed to someone who hires one of these companies is greater than the amount paid to the caregiver. And so, Mr. Esterline, as the operator of one of these businesses can you describe the costs of operating a business outside of the payroll--outside the amount of money that you have to pay in wages to the direct caregivers? Mr. Esterline. So for clarification, Congressman, you were wondering what the overall operating expenses, administrative expenses---- Mr. Goodlatte. Right. Mr. Esterline [continuing]. Or my business? Mr. Goodlatte. Exactly. Mr. Esterline. Certainly. Thank you for the question. I would like to start by referencing--Congresswoman Woolsey was referencing the profits of these businesses of 30 to 40 percent. I have been doing this for 11 years and, boy, it would be nice to have 30 or 40 percent profit but the reality is is it is not. Not even close. But to answer your direct question, Congressman, there is a--for the caregiver expense we have got the gross payroll dollars; we then have to match all the employer taxes; we also have to carry workman's comp insurance, putting us well over 50 percent out the door. Then we have got the administrative costs for the administrative people that are doing the hiring, the training, the scheduling, the marketing of our services---- Mr. Goodlatte. You also bear the risk, too, don't---- Mr. Esterline. We absolutely bear the risk. Mr. Goodlatte. If an individual wants to save money and, as Mr. Dombi suggested, go to Craigslist or call a neighbor or call a friend, find somebody that way, they certainly can do that and it might be--may be less expensive for them to do that. But when they do that they don't--and something goes wrong and that individual causes some harm that individual is likely not going to be able to make things right financially, whereas your company has the insurance, has the wherewithal to make things right if something does go wrong. Is that not---- Mr. Esterline. That is absolutely correct--general liability, professional liability to cover all of our caregivers and to protect our clients. Mr. Goodlatte. And do you have competitors? Mr. Esterline. Do I have competitors? Mr. Goodlatte. Do you have other businesses in your area that offer similar services? Mr. Esterline. That are opening every single day, Congressman. Mr. Goodlatte. Yes. And so if they are choosing to pay more to their workers or charge less to the people hiring the service, you have got to be aware of that, you have got to compete with that along with competing with people who decide they are going to simply directly go to the newspaper, or Craigslist, or a referral from a friend or neighbor. Mr. Esterline. Yes. And I think that, really the point is, I am here defending my caregivers. I am really here advocating for them, and I have lived it every single day---- Mr. Goodlatte. You take the time to screen them, to train them, to make sure they are going to do a good job so that your company has a good reputation and people will want to continue to do business with you. Mr. Esterline. Absolutely. And---- Chairman Walberg. The gentleman's time is expired. Mr. Goodlatte. Thank you, Mr. Chairman. Chairman Walberg. Thank you for your questioning. I recognize the ranking member, Ms. Woolsey? Ms. Woolsey. Thank you, Mr. Chairman. Ms. Ruckelshaus, in Mr. Dombi's testimony he says that the proposed rule is in direct conflict with the legislative history of the Fair Labor Standards Act. I would like to give you some more time to talk about what you--how you believe this proposed rule and the intent of the framers in this companionship exemption. And I would like you to expand into-- this is the 21st century. This is no longer 1974. Ms. Ruckelshaus. Sure. Yes. Thank you for the question. And Mr. Dombi and I were on opposite sides in the Coke case in the Supreme Court, so we--we see the case differently. In 1974, when the Congress decided to extend the Fair Labor Standards Act to domestic service workers for the first time, it carved out two narrow exemptions. One was for casual babysitters and one was for companions. It did not define what companions--``companionship services'' meant and it explicitly left it to the Department of Labor to define what ``companionship services'' meant. The Department of Labor did that in 1975 and it defined companionship services in such a way that the modern home care workforce is now completely swept into what was intended to be a very narrow exception for casual babysitters and companions. The legislative history shows that what the Congresspeople were talking about were elder-sitters--people where were not, as a vocation, doing the things that these workers here today are doing--catheter care, caring for patients with Alzheimer's, with very technical experience. The Congresspeople intended to exempt the casual babysitters and the companions who were more like elder-sitters whose vocation was not taking care of--as a profession. Ms. Woolsey. Thank you very much. So critics of the rule--I am staying with you on this--have argued that continuity of care will be harmed if this rule is in effect. Talk about the effect of low wages on the current home care industry and the turnover rates, and how that affects care. Ms. Ruckelshaus. The problem with the continuity of care arguments that are sometimes made is first, the opponents are suggesting that 24/7 care can only be performed by one worker, and that is just not a workable scenario for anybody. My own grandmother who had three aides who were taking care of her at the end in her home and she loved all of them; she knew them; they were with her for a long time. There was continuity of care and it was the same three workers for a long time. The high turnover, which is estimated to be as high as 65 percent per year, does more damage to the continuity of the workforce than any raise in--from $7 an hour to $9 an hour could ever do. The high turnover not only costs the agencies but it means that the workers leave because they have to leave and there is no continuity of care for the consumers and recipients of the services. Ms. Woolsey. Thank you. Mr. Esterline--yes, thank you--I am so confused about how $8 an hour for 54 hours a week versus $8 for 29 hours a week, in your best judgment, ends up in being better for the worker. How does that work? Mr. Esterline. It is absolutely not better for the worker. Ms. Woolsey. Well why would you make that happen? Mr. Esterline. Well, my---- Ms. Woolsey. What happened to 40 hours a week? Mr. Esterline. Well, I will tell you exactly, Congresswoman. We referenced in testimony earlier about our scheduling software programs and how we can manage and we can do these things. Absolutely we can. In the state of Michigan I have been--we have been successful in doing that. But the issue is is that we are not being--we are--we are giving our caregivers the hours that they want because we have to cap them at 40. Because if not I have got to pass the costs on to my senior clients that are already struggling to pay for the services themselves. Ms. Woolsey. So then why did poor Rosie--I think it was Rosie--only get 29 hours? I mean Doris--Doris. I am sorry. Mr. Esterline. Doris. Yes, it was Doris. Ms. Woolsey. Thank you. I mean, what happened to 40? Mr. Esterline. Well, I would love to give her 40, and anyone of us--anyone of us in this room would love to have Doris for 40-plus hours or the 54 she was averaging before, but it is based on need, and--and as our customers come and go because of various situations that they may be in I can't openly just schedule her; I have to analyze that information daily and weekly in limiting them in their hours, ultimately decreasing their income. It is unfair to them, and this--and this is taking--this is taking money out of their pockets and they have to get a second job. It is not fair. Ms. Woolsey. Okay. Thank you, Mr. Chairman. Chairman Walberg. I recognize myself for my 5 minutes of questioning. Ms. Woodard--Woodard, excuse me--Ms. Woodard, your testimony noted that your father--father's care started with a privately hired caregiver. Ms. Woodard. Yes. Chairman Walberg. However, as your father's--as I remember it--your father's needs changed you hired a caregiver through an agency. Ms. Woodard. Correct. Chairman Walberg. Can you explain why you made the switch to a caregiver hired through an agency? Ms. Woodard. I think that what I did is I made the mistake that a lot of people do and think, ``I know what I am doing; I know this person through church, or they worked at somewhere else and they just retired,'' so I hired somebody to care for my dad, and I knew her so I didn't have to do a background check, I didn't have to make sure she had her license, make sure she, you know, had her papers to work. But then as you start thinking through her being with your father, what if my father fell on her? What if she got injured on the job? Whose responsibility would it be to pay for her back injury or her workman's compensation because she had no workman's compensation? She wasn't licensed or bonded. I had no protection as a consumer. So what I did was actually I called up her homeowner's insurance and I asked him was I at risk, and he said yes, you are at great risk and I would suggest increasing your parents' policy to $1 million because if she does indeed fall, if something happens to her while she is in my house, even if it is involved in being with my father, we were responsible. Chairman Walberg. Okay. Thank you. Mr. Esterline, the notice of proposed rulemaking claims that Medicare and Medicaid figures on home health to support its conclusion that a great deal of the cost would be picked up by Medicare and Medicaid. Let me ask you, how is the companionship industry different from home health? Mr. Esterline. It is different from home health because my caregivers are placed in the homes to care for our clients. They are to be there for them to potentially supervise and make sure that they are safe in their home environment. Secondary services are going to be the assistance to the restroom, or the housekeeping, or the meal preparation, where your home health is going to be going in and per visit--not for an hourly length of time--to go in and assist with a bath--a bath visit, so they are in and out for no length of time, and it is not even scheduled for the time that the--that the senior would like. A lot of times it is like calling Sears: ``We will be there between 1 and 5 for that bath visit.'' So what is different is that we are there to provide the care much more than just a bath visit. Chairman Walberg. How has the Department of Labor's notice of proposed rulemaking altered the services that you are able to provide? Mr. Esterline. I am sorry. Can you say that again? Chairman Walberg. How has the Department of Labor's notice of proposed rulemaking altered the services you are able to provide, if they have? Mr. Esterline. Well, I can tell you exactly. Prior to the rule--or, excuse me, the law change in Michigan in 2006 my staff and I focused 100 percent on consistency in scheduling the caregivers to the hours that they--the designated hours that they wanted to work and making sure that it matched the needs of our clients, and it was 100 percent based on the care being provided. And since the change in the law the third component now is--Doris is a perfect caregiver but we can only put her in there for one night because she has already got so many hours. So what has happened is that she has--it has disrupted the continuity and the consistency of care. Chairman Walberg. Generally speaking, how much does your business--your industry--rely on Medicare and Medicaid payments? Mr. Esterline. As I stated in my written testimony, based on the numbers from the IFA study, it is 85 percent privately paid by the senior or the family member and 5 percent by Medicare and Medicaid. My business is very close to similar to those numbers. Chairman Walberg. How much does your business rely on-- typically--on health insurance? Mr. Esterline. Your traditional health insurance, like Medicare, your Blue Cross Blue Shield, zero. Not one penny is-- the companionship services---- Chairman Walberg. Zero. Mr. Esterline. Zero. Chairman Walberg. So should this rule be enacted, who would pay for the services your business--your industry provides? Mr. Esterline. Well, me personally, it doesn't change one bit for me. I am already living under those--the--those regulations. Chairman Walberg. In Michigan. Mr. Esterline. In Michigan. So I am here to share--and to explain that don't follow Michigan down this road. It is a bad deal for the--for our caregivers and a bad deal for our clients. Chairman Walberg. Do your employees in Michigan make more money now, after the change? Mr. Esterline. No. They are not making more. They are struggling to make the same. And a lot of times the caregivers like Doris--she is not an isolated incident or an isolated situation--we have to cap the caregivers to make it affordable for our--for our seniors, and so it is limiting the income that they are actually going to--they are actually making. I have caregivers that will say to me at any given time, ``Wynn, don't pay me overtime. Let me just care for Mr. and Ms. So-and-so.'' And I say, ``I am sorry. I have to abide by the law. It is not worth going to jail over.'' Chairman Walberg. Well, thank you, each of the panel members. I appreciate your time with us. At this point in time I would ask the ranking member if she has any closing remarks to make. Ms. Woolsey. Thank you, Mr. Chairman. Thank you for this hearing. I believe it was Mr. Dombi that asked, why haven't the rules been changed since 1974, and I think the answer is clear. It is because we have not had a Department of Labor willing to step up to this issue and to bring forth rules that bring this industry into the 21st century, and I thank our current Department of Labor for being willing to do this. Today's hearing questions whether an industry that generated billions of dollars of profit each year can afford to provide basic wage and hour protections for its workforce. These workers enable our loved ones to remain in their homes and preserve their dignity and quality of life. These workers deserve basic minimum wage and overtime protections so that they can provide for their families with the same dignity and self-sufficiency they provide for their clients. As Senator Kennedy said when discussing Fair Labor Standards Act protections, and I quote him--``No one who works for a living should have to live in poverty.'' Today, Mr. Chairman, we heard compelling testimony from Ms. Ruckelshaus clearly demonstrating the need for the Department of Labor's proposed regulation. All workers deserve a fair day's pay for a fair day's work. The home care workforce is no different. These workers, primarily women and minorities, do valuable work and they deserve just as--they deserve just compensation. It is essential that we extend FLSA protections to home health care workers. With that, Mr. Chairman, I would like to ask unanimous consent to submit for the record a letter signed by 86 organizations in support of the Department of Labor's proposed rule and I would like to ask unanimous consent to submit a statement for the record from the American Federation of State, County, and Municipal Employees. And I thank you. [The information follows:] March 6, 2012. Hon. Tim Walberg, Chairman; Hon. Lynn Woolsey, Ranking Member, Subcommittee on Workforce Protections, Committee on Education and the Workforce, Washington, DC 20515. Dear Chairman Walberg and Ranking Member Woolsey: The undersigned organizations support the Department of Labor (DOL) for revising the rules (RIN 1235-AA05) on the ``companionship exemption'' under the Fair Labor Standards Act (FLSA), which currently denies the direct care workforce basic federal wage-and-hour protections. This workforce provides daily supports and services to older Americans and individuals with disabilities who need assistance with personal care and activities of daily living. The work that home care workers and personal care attendants do is vitally important to the health, independence, and dignity of consumers who rely on paid services in their homes. Unfortunately, because of the current DOL regulations, over 1.7 million home care workers are not ensured minimum wage or overtime pay. As a result, wages for this workforce are depressed, earning them low compensation, often for long hours of work. The current federal minimum wage is $7.25 per hour but one quarter of personal care aides earn less than $6.59 per hour and one quarter of home health aides earn less than $7.21 per hour. Nationwide, one out of every 12 low-wage workers is a direct care worker, and typical of a low-wage workforce, these home care workers are more likely to be uninsured, and nearly half receive public benefits such as Medicaid or food stamps. During this economic recovery, we need to implement federal regulatory policies that fight poverty and promote access to quality care and the growth of quality jobs. The current DOL regulations broadly exempt this whole workforce. Such a sweeping policy is unsound, unfair, and undermines the economic recovery and our nation's goals for quality long-term care. Extending basic minimum wage and overtime protections to most home care workers will improve the stability of our home care workforce and encourage growth in jobs that cannot be outsourced. Reducing turnover in this workforce will improve access to and quality of these much-needed services. The work done by these home care workers and personal care attendants affirms the values of dignity and respect we have for our aging citizens and individuals with disabilities. It is time that we value this workforce, too. Now is not the time to delay regulations that would provide them with a small measure of respect--the protection of federal wage-and-hour rules. We oppose efforts to delay issuing the final rule and we support increasing resources to expand in-home supports and services. Our nation faces many challenges to allow consumers and home care workers to live with dignity, respect and independence but the solution to providing these needed services is not to deny paid caregivers federal minimum wage and overtime protections. 9to5, National Association of Working Women Advocacy for Patients with Chronic Illness, Inc. AFL-CIO AFSCME Alliance for a Just Society Alliance for Retired American American Association of University Women (AAUW) American Civil Liberties Union American Federation of Government Employees (AFGE) American Federation of Teachers (AFT) American Rights at Work American Society on Aging Asian Law Caucus, Member of Asian American Center for Advancing Justice Asian Pacific American Legal Center, a member of the Asian American Center for Advancing Justice Association of University Centers on Disabilities (AUCD) Campaign for Community Change Caring Across Generations Center for Law and Social Policy (CLASP) Chicago Jobs Council Coalition of Labor Union Women Coalition on Human Needs Communications Workers of America (CWA) Community Action Partnership Cooperative Care D.C. Employment Justice Center Demos Direct Care Alliance Direct Care Workers of Color, Inc. Disciples Justice Action Network Equality State Policy Center Excluded Workers Congress Families USA Food Chain Workers Alliance Friends Committee on National Legislation Gray Panthers Health Care for America Now Indiana Care Givers Association Institute for Policy Studies Interfaith Worker Justice International Brotherhood of Teamsters International Union, United Automobile, Aerospace & Agricultural Implement Workers of America, UAW Jobs With Justice Lawyers' Committee for Civil Rights Under Law League of United Latin American Citizens Legal Aid of Marin Legal Momentum MataHari: Eye of the Day MomsRising National Academy of Elder Law Attorneys, Inc. (NAELA) National Alliance for Direct Support Professionals National Consumer Voice for Quality Long-Term Care National Council of Jewish Women National Council of La Raza (NCLR) National Council of Negro Women (NCNW) National Council of Women's Organizations National Domestic Workers Alliance National Employment Law Project (NELP) National Employment Lawyers Association (NELA) National Gay and Lesbian Task Force Action National Hispanic Council on Aging National Partnership for Women & Families National Women's Law Center National Women's Health Network National Workrights Institute NCB Capital Impact NETWORK, A National Catholic Social Justice Lobby OWL-The Voice of Midlife and Older Women Paraprofessional Healthcare Institute (PHI) Partnership for Working Families Provincial Council of the Clerics of St. Viator (Viatorians) Raising Women's Voices for the Health Care We Need Sargent Shriver National Center on Poverty Law Service Employees International Union (SEIU) Sugar Law Center for Economic and Social Justice The Brazilian Immigrant Center The Iowa Statewide Independent Living Council (SILC) The Leadership Conference on Civil and Human Rights United Steelworkers (USW) Universal Health Care Action Network (UHCAN) USAction Virginia Poverty Law Center Voices for America's Children Voices for Progress Washington Community Action Network Wider Opportunities for Women Women Employed Working America ______ Prepared Statement of the American Federation of State, County and Municipal Employees (AFSCME) Mr. Chairman and members of the Subcommittee, on behalf of the 1.6 million members of the American Federation of State, County and Municipal Employees (AFSCME), including approximately 125,000 home care providers, please include the following statement in the hearing record for ``Ensuring Regulations Protect Access to Affordable and Quality Companion Care.'' The home care providers represented by AFSCME are a lifeline to independence and dignity for the consumers to whom they provide support services. These home care workers assist individuals who have functional limitations--due to age, chronic condition, illness or injuries--with mobility, personal hygiene, toileting, dressing, eating, transportation, cleaning and cooking, and other daily activities of living which many of us take for granted. The support and services home care workers provide enable consumers to continue to live in the comfort of their own homes and remain active and part of their families and communities. The job home care workers do is demanding and intensely personal in nature. It requires an exceptional emotional connection and is frequently draining. Our members find the work worthwhile because they know they make a difference in someone's quality of life every hour they work. For some older Americans receiving home care services, these paid caregivers may be the only person they see regularly beside their physician. The work is highly valued by consumers and their families but compensation has been suppressed due to the overly broad Department of Labor regulations that exempt the whole home care industry, including home care agencies, from having to plan for and comply with basic federal wage and hour protections. The federal minimum wage is $7.25. One quarter of personal care aides earn less than $6.59 per hour, and one quarter of home health aides earn less than $7.21 per hour.\i\ Moreover, the real hourly rates are lower because these hourly rates are usually for direct care hours only, as workers typically are not paid for travel time between clients or reimbursed for travel costs. --------------------------------------------------------------------------- \i\ http://www.carseyinstitute.unh.edu/publications/IB-Smith-Home- Care-Workers.pdf --------------------------------------------------------------------------- These suppressed wages hurt workers, employers and our economy, and keep home care workers and their families nearly impoverished. Two out of five home care workers employed by a home care agency lack health insurance. Due to high injury rates, home care workers are especially vulnerable without adequate insurance coverage. Nearly one out of two home care workers are in households relying on public assistance, such as Medicaid and food stamps, to meet their basic needs. For employers it means costly high turnover. The national price tag for high turnover in this industry is roughly on the order of $4.1 billion.\ii\ Small businesses that want to pay workers better wages are put at an unfair disadvantage because there is no federal minimum wage that applies to home care providers to level the competitive playing field. --------------------------------------------------------------------------- \ii\ http://www.directcareclearinghouse.org/download/ TOCostReport.pdf --------------------------------------------------------------------------- The U.S. Department of Labor projects that at least another third of a million new home health aides will be needed by 2014 to meet the home health care needs of an aging population that is expected to more than double, from 13 million in 2000 to 27 million in 2050. Because this demand for these services will increase as our nation ages, the low wages of these jobs undermine economic growth and increase worker shortages. Our members are committed to those they serve. They are acutely aware of how the low wages and high industry turnover destabilize the workforce, reducing access to services and undermining the delivery of quality services that truly satisfy the needs of elders and persons with disabilities. The absence of federal wage and hour protections for home care workers puts the individuals who need their services at risk since an individual's quality of life and safety may depend on the reliability and the skill of their home care worker. Low wages will continue to deprive individuals with functional limitations access to needed services as low wages drive more workers out of these jobs at a time when the demand is growing. The significant disparity between what home care agencies charge and are paid versus the hourly wages of home care workers suggests that the industry can afford to comply with basic federal wage and hour rules. The average rate paid by state Medicaid programs to agencies providing personal care services was $17.73 per hour in 2010. In comparison, to the median wage received by home care workers generally (under both private and public-pay arrangements) who work in the overall home care industry (both private and public-pay) was $9.40.\iii\ According to the National Private Duty Association, the national average charge to families for personal care services is $19.82 per hour, compared to the $9.69 per hour paid to the worker. Accordingly, many for-profit agencies charge consumers approximately twice the hourly rate paid to caregivers. This data suggest the 30% to 40% profit margins that for-profit franchises report receiving for delivering personal care services are being underwritten by the low wages paid to caregivers. --------------------------------------------------------------------------- \iii\ http://www.directcareclearinghouse.org/download/pcs-rates- and-worker-wages.pdf --------------------------------------------------------------------------- It is time to be fair to those who care. It is time to end the broad exemption from federal wage and hour rules for a whole industry. Those who rely on home care services to remain independent need increased access to in-home supports and services--and so do their families. The (mostly) older women whose compassionate hearts and steady hands provide those services should be valued and respected. We are long overdue to provide home care workers with basic federal wage and hour protections. ______ Chairman Walberg. I have no objection. Ms. Woolsey. With that, I yield. Chairman Walberg. I was waiting for the last word. Well again, I thank my ranking member, a good friend from California, for her statement, for the concern, and we certainly, in this hearing, want to make sure that issues are addressed that, number one, meet the needs of the clients, of the patients, of those that are requiring assistance of caregivers that I have stated earlier on. I frankly almost see it as unbelievable the type of work that they are willing to do and the care and commitment they make to people even like my mother, that supported my wife and myself in providing an additional 3 years on top of 10 prior years of making sure she could stay at--with us. The only reason that that changed was it became--even with those caregivers supplementing my wife and myself--it became dangerous for her to live at home, and so now we are thankful we have nursing care that provides for her. But that doesn't change the needs of many, many people, and a growing number of us, as the age increases, that need care, hopefully in home, in settings that are familiar, that are loving, that are friendly and caring, and provide opportunities for them to live with dignity in the remaining years of their life. On the other side of the ledger, we want to make sure that those that provide that care, starting with the caregiver that comes directly to the home and to the patient--the client--have incentive to do the job that they are uniquely qualified to do and have the abilities, the emotions, the sensitivity, and the desire to provide that care in loving, careful, and consistent ways. And that in turn, they have the ability to know that they are appreciated, that they have an income that meets their needs or approaches very carefully meeting their needs, as well. In turn, we have a great amount of appreciation for the caregiving organizations that provide in-home care, supervise, train, administer, and send out to those settings people who will--who would care for the clients. We understand that in order to do that, and having experience in organizing that for just one person--my mother-- it is a challenge. Then when you add to that the liabilities, the cost factors, the additional component parts to make sure that the businesses stays in business and we don't find another business that goes out and now a loss of caregivers, that their needs are met, as well. For those purposes, today we held this hearing. For those purposes, today we will make sure that the remarks given from all perspectives are part of the comment for the Department of Labor that would expand their ability to make the proper decision in putting forth rules, that they also understand that this Congress, over the course of years, has decided the best approaches to take in dealing with that and to author that without careful and due consideration in time of economic upheaval, and challenge, and expanding need, and to do that without caring for the full picture would be an extreme problem--human problem, not just a political economic problem, but a human problem, as well. So I am trusting that this hearing will provide insights in unique and special ways to allow us to expand the opportunities to give care, expand the opportunities to be employed in this most important field, expand the opportunities to know that I will be cared for at some point in time, if necessary in my life---- Ms. Woolsey. Me first. Chairman Walberg. You first? Well, you are tenacious enough probably to outlive me. But both of us, that we would have that opportunity, and our constituents, as well, in a--in the greatest country on the earth, have the greatest care possible, as well. So I appreciate the hearing today and look forward to good things coming from it. And having no other questions or comments, the committee is adjourned. [Additional submission of Mr. Walberg follows:] Prepared Statement of the National Federation of Independent Business (NFIB) Thank you Chairman Walberg, Ranking Member Woolsey, and Members of the Subcommittee for holding this hearing. The National Federation of Independent Business (NFIB) appreciates the Subcommittee on Workforce Protections focusing on the effects the U.S. Department of Labor's proposed changes to the companionship exemption will have on all stakeholders in the companionship care industry. We are thankful for the opportunity to offer the following statement on how the proposed rule will affect small businesses in the industry. NFIB is the nation's leading small-business advocacy association, representing members in Washington, D.C., and all 50 state capitals. Founded in 1943 as a nonprofit, nonpartisan organization, NFIB's mission is to promote and protect the right of its members to own, operate, and grow their businesses. NFIB represents about 350,000 independent business owners who are located throughout the United States, including more than 300 businesses that provide in-home care to individuals that require it. The U.S. Department of Labor (DOL) proposes to revise the current Fair Labor Standards Act (FLSA) regulations pertaining to the exemption for companionship services and live-in domestic services. Currently, the FLSA exempts from its minimum wage and overtime provisions domestic service employees. The most important proposed change eliminates the use of this exemption by third-party employers of companion care workers. NFIB believes that the DOL should keep the companionship exemption for minimum wage and overtime pay to covered workers. Simply put, this proposal is a solution in search of a problem. Any change to the structure of the current exemption will have a profound negative effect on the small businesses that provide such services, as well as employees and clients. NFIB members in this industry have four major concerns with the proposed rule. First, we believe that the agency has not sufficiently identified a market failure that warrants the rule being proposed. Second, the proposed rules will have a substantial negative impact on the marketplace that will close businesses, have unintended consequences on employees, and jeopardize the safety and quality of life of clients. Third, we believe that the DOL is severely underestimating the number of businesses (and thus employees and clients) that will be affected by this proposal. Fourth, if finalized, the proposal would create a significant paperwork and recordkeeping burden that will disproportionately affect small businesses. The DOL has not identified a market failure in need of correction NFIB believes that the DOL has not sufficiently shown that the market for in-home care fails any of the participants within it. Third- party employers are able to make modest profits and employ thousands of workers nationwide. These workers already earn wage rates at or above the minimum wage, as the preamble to the NPRM indicates. This fact is also supported by a study completed by IHS Global Insight for the International Franchise Association Education Foundation (IFA study), which found the average rate paid to employees of franchised small businesses was nearly $10 per hour.\i\ The employees also enjoy the stability of working for one employer at the home of one or two clients. Many that live in the home where they work also typically enjoy room and board in addition to their wage. Finally, the clients enjoy affordable care and the stability of having the same worker in their home every day--which can be imperative in cases of dementia and other cognitive diseases. --------------------------------------------------------------------------- \i\ ``Economic Impact of Eliminating the FLSA Exemption for Companionship Services,'' HIS Global Insight for the International Franchise Association Education Foundation,'' February 2012. http:// emarket.franchise.org/CompanionCareReport.pdf --------------------------------------------------------------------------- The DOL has not justified the need for action in this situation. The Mercatus Center at George Mason University, a research center that aims to apply ``sound economics to offer solutions to society's most pressing problems,'' recently graded this NPRM as part of its Regulatory Report Card project.\ii\ Mercatus looked at how well the DOL identified the problem in need of correction, the thoroughness of the Regulatory Impact Analysis (RIA), and other areas. In total, this NPRM scored just 24 points out of 60 possible. --------------------------------------------------------------------------- \ii\ ``Regulatory Report Card: Application of the Fair Labor Standards Act to Domestic Service,'' Mercatus Center at George Mason University, February 2012. http://mercatus.org/reportcards/application- fair-labor-standards-act-domestic-service --------------------------------------------------------------------------- In the area of ``How well does the analysis identify and demonstrate the existence of a market failure or other systemic problem the regulation is supposed to solve?'' the NPRM scored just one out of a possible five points. The Regulatory Report Card concludes ``the RIA fails to identify the labor-market failure that necessitates the use of the minimum wage, overtime, and travel compensation regulations set forth in the DOL's NPRM.'' We strongly encourage the DOL to review this document. NFIB strongly believes that the DOL's inability to demonstrate a market failure in the in-home care market requires the agency to withdraw the proposal and maintain the current exemption. Impact of the proposed rule on the marketplace Given that there is no market failure in the in-home care industry, it is important to demonstrate the breadth of impact that the DOL's interference will have on the marketplace. Because virtually all employees make at or above minimum wage, it is safe to assume that negligible costs will be imposed on employers for this requirement. However, the requirement of overtime pay at time- and-a-half will have a significant effect on employers. These businesses have to make every effort to keep costs affordable to their clients. Adding overtime makes in-home care unaffordable for many clients. Therefore, third-party employers will alter work schedules to ensure that each worker's time stays below the overtime threshold. In order to have the staff available to fill the new shifts that result, companies will need to hire and train additional workers. The IFA study found that nearly 80 percent of respondents are at least somewhat likely to hire more workers. The cost of hiring and training a new employee for a small business (in this case, a business with 500 employees or fewer) is at least $3,162, based on data from the Society for Human Resources Management--a figure that does not include the cost of background checks or other pre-employment screening. If a 100- employee company has to double its staff, that is an upfront cost of at least $316,200, assuming the small business can find the employees needed to service its clients. If businesses are unable to meet the new costs or find the right amount of labor, many will have to close their doors hurting everyone in the market. This potential uptick in hiring new workers, however, should not be mistaken as a creation of jobs as a result of this proposal. Because there are those businesses that will scale back their services, the IFA study found that the total projected number of jobs lost to be 2,630-- and this is just from the 158 respondents, not all companies nationwide. Expect job losses to be significantly higher. By-and-large, employees like the present arrangement--and this NPRM would damage it. Employees enjoy making a decent wage for the hours they want to work. Workers also enjoy the ability to work in one location, with one client. They form a personal relationship with that client that goes beyond that of a simple service provider. As an example, employees that enjoyed getting paid for working 60- hour weeks in the same work site will be greatly harmed. Because their hours will be cut--to say 40 hours--that worker will have to try to find another 20-hour weekly schedule with another in-home care company to make up the difference. This new work, if they are able to find it, will likely be in a different location than their first job, requiring travel time to get to the additional work site--which means they will have less time to spend with their families or to use how they would otherwise like to. Assuming the jobs pay the same wage rate, the worker is also no better off financially than under the current structure. The DOL also needs to consider how the agency's interference will affect clients. Once overtime is introduced into the equation, care becomes much more difficult to afford. According to figures from California Association for Health Services at Home (CAHSAH), the annual cost to a client for live-in care is $70,000-$80,000 depending on the state. With overtime passed along to the client that cost escalates to $140,000-$185,000. The result is that many families, who want their loved one to live out their final years at home, will have to instead choose institutionalized care like a nursing home. Quality of life, and in many cases the length of life, is reduced. Another option includes getting multiple workers to come in to the home to fill the needed shifts. However, clients prefer having one steady presence. In cases of dementia or other cognitive diseases it is not a preference but a necessity. Having multiple providers can have significant stress or safety concerns on these particular clients. Furthermore, another safety issue is presented here. Third-party providers screen workers with background checks to help ensure that no malicious or devious persons are working in the home of a client. As costs increase, many in-home care clients may choose to hire a worker off the ``gray market,'' which is essentially someone off the street with little or no training or professionalism. These workers can be paid below minimum wage and under-the-table, which is clearly counter to the goal DOL wishes to address with this NPRM. These workers also pose safety and theft risks to clients. Nearly 90 percent of IFA study respondents believe their clients are very likely to seek other care, such as underground providers. The effects of DOL interference in this market will harm all actors in the market and benefit no one. NFIB believes the agency's lack of justification for interference requires the agency to abandon this proposal and maintain the exemption as is. Underestimation of affected businesses NFIB believes that the DOL erroneously focused its industry analysis on ``home health care'' organizations, which are funded in part by Medicare, and neglected the industry segment known as ``home care aid'' organizations, which are not paid for with public assistance in any way. While estimates on the number of firms in this category are hard to come by, one reliable figured has been furnished by CAHSAH. This organization published a report in 2009 that estimated there are 1,200 home care aid organizations in the state.\iii\ Since California has 12 percent of the U.S. population, one can reasonably assume that there are close to 10,000 home care aid organizations in America--all of which were left out by the DOL. --------------------------------------------------------------------------- \iii\ ``How Large is California's Home Care Industry,'' California Association for Health Services at Home, December 2009. --------------------------------------------------------------------------- Furthermore, the IFA study found that 85 percent of respondent companies' revenue comes directly from the customer or client, which directly contradicts DOL's assertion that 75 percent of total payments in the affected industry come from Medicare and Medicaid. Additionally, this misrepresentation of the industry has the potential to violate the Regulatory Flexibility Act, which requires a thorough analysis of a proposed rule's impact on the small businesses in an affected industry. At a minimum, the study should trigger a complete reexamination of the affected number of businesses and the DOL should conduct a new impact analysis. Disproportionate paperwork and recordkeeping burden on small businesses The DOL has estimated that paperwork and recordkeeping associated with this proposed rule will cost in excess of $22.5 million per year. This is a substantial burden that will disproportionately impact small businesses. Small businesses face unique difficulties in regulatory compliance. The SBA Office of Advocacy released a study in 2010 that showed the smallest businesses--those with fewer than 20 employees-- spend 36 percent more per employee per year complying with federal regulations.\iv\ --------------------------------------------------------------------------- \iv\ ``The Impact of Regulatory Costs on Small Firms,'' Crain and Crain for the SBA Office of Advocacy, September 2010. http:// archive.sba.gov/advo/research/rs371tot.pdf --------------------------------------------------------------------------- The reason regulatory compliance costs are so disproportionate is because in a small business the task of compliance falls on the small- business owner, whereas in a larger business the task would fall on a specialized compliance expert. Not only is a small-business owner's time more valuable, but the complexity of regulatory compliance does not make it easy for a layperson to understand. Add in the fact that compliance must be done in addition to core business tasks like generating sales, taking inventory, and managing employees and it is easy to see how quickly the costs escalate for a small business. This substantial paperwork burden can be avoided by maintaining the exemption for third-party home care providers. In conclusion, NFIB believes that the DOL should withdraw this proposal and maintain the current exemption for in-home providers as is, including for third parties. The agency has not justified in any compelling way its need for action. Even worse, agency interference will significantly harm all actors in the market. Small businesses will be forced to try to absorb significant personnel and paperwork costs. Employees will have to work for multiple providers in multiple locations just to make the same wage they enjoy today. Clients will be faced with terrible options--either moving to institutionalized care, multiple providers, or navigating the gray market. In addition, the agency has not come close to identifying the universe of businesses, workers, or clients affected by this rulemaking because it has ignored the private-pay market. NFIB appreciates the opportunity to submit comments for the hearing record, and appreciates the Subcommittee's work on this important issue. ______ [Additional submissions of Ms. Woolsey follow:] March 6, 2012. Hon. Tim Walberg, Chairman; Hon. Lynn Woolsey, Ranking Member, Subcommittee on Workforce Protections, Committee on Education and the Workforce, Washington, DC 20515. Dear Chairman Walberg and Ranking Member Woolsey: Caring Across Generations (CAG) supports the Department of Labor (DOL)'s rulemaking (RIN 1235AA05) to revise the ``companionship exemption'' regulations under the Fair Labor Standards Act (FLSA). The current regulations deny minimum wage and overtime protection to direct care workers. The proposed regulations would narrow the companionship exemption and provide fundamental labor protections to most direct care workers. CAG is a campaign to transform long term care in the United States for individuals who rely on long term services and supports, for the workers who provide home care, and for the individuals and families who struggle to find and afford these services. Finalizing the proposed regulation would be an important recognition of the importance of the work that caregivers perform and would represent an important step towards ensuring both that these vital workers are treated with dignity and respect and that seniors and people with disabilities receive the support that they need to live independently in their homes and communities. Direct care workers provide daily supports and services to older Americans and individuals with disabilities who need assistance with personal care and activities of daily living.Nearly 70% of people turning 65 today will need, at some point in their lives, help with activities of daily living, such as bathing, feeding, and dressing. The work that home care workers and personal care attendants do is vitally important to the health, independence, and dignity of consumers who rely on paid services in their homes. Unfortunately, because of the current DOL regulations, over 1.7 million home care workers are not ensured minimum wage or overtime pay. As a result, wages for this workforce are depressed. During this economic recovery, we need to implement federal regulatory policies that fight poverty, create jobs, and promote access to quality long term care. The current DOL regulations broadly exempt the direct care workforce from fundamental labor protections. Such a sweeping policy is unsound, unfair, and undermines our economic recovery and our nation's goal of promoting quality long-term care. Extending basic minimum wage and overtime protections to most home care workers will improve the stability of our home care workforce and encourage growth in jobs that cannot be outsourced. Reducing turnover in this workforce will improve access to and quality of these vital services. Home care workers and personal care attendants provide critical support to enable seniors and people with disabilities to live independently in their homes and remain a vital force in their communities. It is time that we value the workers and affirm the value of the support they provide. Now is not the time to delay regulations that would provide them with a small measure of respect--the protection of federal wage-and-hour rules. We oppose efforts to delay issuing the final rule, and we support increasing resources to expand in-home supports and services. Our nation faces many challenges to allow consumers and home care workers to live with dignity, respect and independence, but the solution to providing these critical services is not to deny paid caregivers federal minimum wage and overtime protections. Sincerely, Ai-jen Poo, Co-Director, On Behalf of the Caring Across Generations Campaign. ______ March 19, 2012. Hon. Tim Walberg, Chairman; Hon. Lynn Woolsey, Ranking Member, Subcommittee on Workforce Protections, Committee on Education and the Workforce, Washington, DC 20515. Dear Chairman Walberg and Ranking Member Woolsey: As communities of faith united by our common religious traditions and values of justice and compassion, we urge you to support the Department of Labor's (DOL) revised rules (RIN 1235-AA05) on the ``companionship exemption'' under the Fair Labor Standards Act (FLSA), which currently denies the direct care workforce basic federal wage-and-hour protections. Further, we urge you to oppose any delay in the implementation of these long- overdue rules The work done by our nation's more than 1.7 million direct care workers is a daily testament to our values as a compassionate society. Those who provide support and services to individuals who would otherwise be unable to perform basic activities of daily living deserve--at a minimum--a just and fair wage. Direct care workers provide the gentle touch to help lift a frail person from their bed in the morning. They provide the steady hand to feed an individual with disabilities. They offer the deep kindness necessary to bathe a person who can no longer bathe herself, but wants to remain in the comfort of her own home. Because of the challenging and intense work done by this workforce, millions of individuals are able to live at home with dignity and remain active members of their families and communities. Though their work is of priceless value to the families they serve, home care workers and personal care attendants earn low-wages for long hours. Approximately 45 percent of direct-care workers live in households below 200 percent of the federal poverty level; nearly half of all direct-care workers live in households that receive one or more public benefits such as Medicaid or the Supplemental Nutrition Assistance Program (SNAP). It is an injustice that home care workers have thus far been denied basic protections afforded to all other hourly workers under the FLSA. We urge you to support the DOL's efforts to address this problem by backing the revised rules that would provide this growing workforce with basic wage-and-hour protections and opposing any delays. Respectfully, Center of Concern, Church Women United, Disciples Justice Action Network, The Episcopal Church, Episcopal Women's Caucus, Faith in Public Life, Friends Committee on National Legislation, Interfaith Worker Justice, Jewish Community Action, St. Paul, MN, Jewish Women International, Jews United for Justice, National Advocacy Center of the Sisters of the Good Shepherd, National Council of Catholic Women, National Council of Jewish Women, National Council of the Churches of Christ, USA, NETWORK, A National Catholic Social Justice Lobby, Presbyterian Church (U.S.A.) Office of Public Witness, Progressive Jewish Alliance & Jewish Funds for Justice, Union for Reform Judaism, Unitarian Universalist Association of Congregations, United Church of Christ, Justice and Witness Ministries, The United Methodist Church--General Board of Church and Society. ______ March 20, 2012. Hon. Tim Walberg, Chairman; Hon. Lynn Woolsey, Ranking Member, Subcommittee on Workforce Protections, Committee on Education and the Workforce, Washington, DC 20515. Dear Chairman Walberg and Ranking Member Woolsey: As home care employers, we are writing in support of the Department of Labor's proposed rule (RIN) 1235-AA05 that would narrow the current exemption of home care workers from the minimum wage and overtime protections under the Fair Labor Standards Act. We own or run agencies that vary in size from 4 employees to over 200. We operate in states that have minimum wage and overtime protections and in those that don't. We are employers that receive public funds from Medicare and Medicaid, those with public and private revenues, and those who rely on private pay only. We value the work our employees do and have always treated our workers with respect--and that includes fair compensation. We believe strongly that our employees deserve the same federal minimum wage and overtime protections that are granted to other American workers, including nursing assistants who do similar work in different settings. Many of our clients have high-hour needs, and as a business we can manage those cases without excessive overtime. Our workers provide a wide range of services, including personal care, household assistance, medication reminders, meal preparation and companionship. This work requires skill and compassion. It is by no means equivalent to Friday-night babysitting. It is a career that allows our employees to give back to their communities while helping to provide for their families. One of the challenges we face as a business is recruiting and retaining a qualified workforce. We believe that providing a compensation floor will help to attract more workers to the field and reduce turnover, which adds unnecessary costs to our business ledger and undermines continuity of care. The proposed rule shows that home care is a ``real'' job, deserving of respect and fair pay. Without this action, we will struggle to provide quality care to an exploding population of seniors. Signed, Bring Care Home, (Massachusetts--347 employees). Buffalo River Services, (Tennessee--180 employees). Catalina In-Home Services, (Arizona--85 employees). Cooperative Home Care, (Wisconsin--50 employees). Cooperative Home Care Associates, (New York--1,800 employees). From the Heart, (Pennsylvania--100 employees). Graham Behavioral Services, (Maine--111 employees). Halcyon Home Care, (Maine--4 employees). Home Care Associates, (Pennsylvania--175 employees). Home Care Partners, (Washington, DC--210 employees). In-Home Supportive Services Consortium, (California--450 employees). Lutheran Social Services In-Home Care, (New Hampshire and Connecticut--475 employees). North Shore Community Action Programs, (Massachusetts--50 employees). Paradise Home Care Cooperative, (Hawaii--25 employees). ______ Prepared Statement of the Paraprofessional Healthcare Institute (PHI) Chairman Walberg, Ranking Member Woolsey, and members of the Subcommittee, on behalf of PHI, the nation's leading expert on the direct-care workforce, please include the following statement in the hearing record for ``Ensuring Regulations Protect Access to Affordable and Quality Companion Care.'' PHI strongly supports the Department of Labor's (DOL) proposal to extend federal minimum wage and overtime protections to nearly 2.5 million home care workers. This extension of basic labor protections to home care workers will strengthen the infrastructure for home and community-based services, assuring access to affordable, quality care. Home care is the nation's fastest-growing occupation, expected to grow to over 3 million workers by 2020. Yet these workers, who are 90 percent female with a median age of 45, continue to be treated in the same fashion as teenage babysitters. Home care, however, is a true vocation, and should be treated as such under the law. Home care aides are essential to the continued independence of millions of elders and people with disabilities, assisting them to remain healthy, at home, and engaged in their communities. They provide skilled personal care services, ensuring that people with functional limitations are able to get out of bed, bathe, dress, eat, manage their medication, and so on. The work is physically and emotionally demanding; rates of injury are higher than for the construction trades. Nevertheless, home care workers earn $9.40 per hour on average, and one in three has no health insurance coverage. More than half work part-time (often involuntarily), resulting in average annual earnings of $16,600. As a result of this poor compensation, about half of home care workers live in households that rely on public assistance to make ends meet. The DOL's proposed rule would help to improve the quality of home care jobs. It brings our nation's treatment of these workers in line with changes in the provision of home care services over the last four decades. In particular, it recognizes the formalization of the industry and the professionalization of the workforce. The millions of women who provide these services are no different from those who work in similar jobs in nursing homes and assisted living facilities. There is absolutely no justification for continuing to treat these workers as casual companions, exempting them from basic labor protections that most American workers have enjoyed for over 70 years. In establishing FLSA in 1938, and in broadening coverage in subsequent years, the federal government clearly articulated its policy goals: to provide low-income workers with higher wages, better working conditions, and more leisure time; to discourage excessive working hours and promote full employment; and to stabilize our economy by boosting consumer spending. These goals are as relevant today for the home care workforce. FLSA protections will help to improve wages and working conditions across the industry, affecting as many as 3 million workers by the end of this decade. Better wages for millions of home care workers will boost consumer spending. Applying overtime rules to home care agencies will encourage efforts to spread work more evenly, reducing overwork and providing more hours for workers who desperately need them. In addition, FLSA protections will help to stabilize and grow the workforce by making home care jobs more competitive. This regulatory change will also help to address the industry's high turnover rates-- currently 50 to 60 percent annually--which undermine continuity and quality of care and cost the system billions in recruitment and replacement expenses. We believe that recent industry studies suggesting that the proposed regulations will have a negative impact on businesses, consumers, and workers are seriously flawed (see www.phinational.org/ fairpay/ for a full critique). Our analysis of nationally representative survey data aligns with the conclusions of the DOL--the economic impact of the proposed changes would be relatively small and would have little impact on the affordability of services for consumers. Despite a deep recession, home care industry revenues have doubled to $84 billion since 2001 (though workers' wages have remained stagnant). Our analysis shows that less than 10 percent of the workforce reports working overtime, making it unlikely that overtime costs will significantly increase costs for businesses or the clients they serve. Moreover, we know that in the 15 states that already require agencies to pay minimum wage and time and a half for overtime, home care agencies remain successful enterprises. The companionship exemption was never intended to provide a means for agency employers to save on labor costs. Today's workers are not ``companions,'' who sit with elders to provide fellowship and protection. These are skilled caregivers who provide personal care, medical-related assistance, and social supports to millions of elders and people with disabilities who want to live independently. As workers vital to our health and aging services, they deserve better. It is time to provide them with the most basic wage and hour protections that most other American workers enjoy. For more information, contact Carol Regan, PHI Government Affairs Director, at cregan@PHInational.org or 202-223-8355. All data cited can be found at www.PHInational.org/homecarefacts ______ March 20, 2012. Hon. Tim Walberg, Chairman; Hon. Lynn Woolsey, Ranking Member, Subcommittee on Workforce Protections, Committee on Education and the Workforce, Washington, DC 20515. Dear Chairman Walberg and Ranking Member Woolsey: Guided by our Jewish values of justice and compassion, we urge you to support the Department of Labor's (DOL) revised rules (RIN 1235-AA05) on the ``companionship exemption'' under the Fair Labor Standards Act (FLSA), which currently denies the direct care workforce basic federal wage- and-hour protections. Further, we urge you to oppose any delay in the implementation of these long-overdue rules While the number of elderly Americans who need home care is exploding, the number of elderly Jews is proportionally even here--with at least 19 percent of American Jews now over 65 or older, as compared with 12% of the general population. Families and individuals struggle greatly to care for the elderly or disabled loved one at home, and frequently must hire a home care worker to assist a fragile family member with their most intimate needs, such as walking, bathing, eating, dressing, and ensuring that medications are taken properly. As we visit and care for elderly and home-bound members of our communities and families, we see the vital role that home care workers play. The future of home care is a top concern for the Jewish community, and a critical problem we must address is that half of all home care workers leave the job each year due to low pay and difficult working conditions. This extraordinary turnover has obvious implications for both the quality of care and for whether there will be enough workers to fill the need in the long run. The Fair Labor Standards Act (FLSA) was passed by Congress in 1938 with the goals of fighting poverty by raising workers' wages, and stimulating economic growth--goals as important today as they were back then--but America's 1.7 million home care workers are excluded from the FLSA and, in 29 states, have no minimum wage protections. This exclusion is a vestige of a long history of devaluing the work of women and African Americans under federal labor laws. In December President Obama proposed a rule change to include home care workers in FLSA protections. Our tradition teaches the importance of caring for our elders and treating workers fairly. Supporting this rule change is one way we can bring these values to life, right now. Please join us and our many partners in showing the Obama Administration that the Jewish community supports basic rights for the workers who care for the most vulnerable members of our families. It is an injustice that home care workers have thus far been denied basic protections afforded to all other hourly workers under the FLSA. We urge you to support the DOL's efforts to address this problem by backing the revised rules that would provide this growing workforce with basic wage-and-hour protections and opposing any delays. Respectfully, Jewish Community Action, Jewish Council on Urban Affairs, Jews for Racial and Economic Justice, Jews United for Justice, National Council of Jewish Women, Progressive Jewish Alliance & Jewish Funds for Justice, Union for Reform Judaism, Uri L'Tzedek. ______ [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] [Additional submissions of Mr. Dombi follow:] March 21, 2012. Mary Ziegler, Director, Division of Regulations, Legislation and Interpretation, Wage and Hour Division, U.S. Department of Labor, Room S-3502, 200 Constitution Avenue, NW, Washington, DC 20210. Re: Application of the Fair Labor Standards Act to Domestic Services; 76 Fed. Reg. 81190 (December 27, 2011) Dear Ms. Ziegler: Thank you for the opportunity to provide comment on the proposed rule: Application of the Fair Labor Standards Act to Domestic Services; 76 Fed. Reg. 81190 (December 27, 2011). This proposal will have significant impact on access to home care services for millions of elderly and infirm, the workers who provide home care, the businesses that deliver such services, and the public programs that often pay for the care. We urge the Department of Labor to proceed very cautiously on its proposal. Specifically, we recommend that the Department withdraw the current proposal, initiate a comprehensive and focused study of the actual and expected impact of the proposal on all affected parties, and consider the wide range of alternatives to the current proposal before moving forward. There are very strong indications that the Department did not accurately or sufficiently evaluate the impact of the proposal as it: (1) relied upon data from programs that do not fund ``companionship services,'' (2) failed to develop the basic and essential information necessary to understand the proposal's impact on privately purchased care, (3) fell far short of a reliable analysis of the proposal's impact on Medicaid and other public program spending, (4) provided no analysis of impact on the wholly distinct services of live-in caregivers, and (5) failed to take advantage of the opportunity to evaluate actual impact occurring in the states where the ``companionship services'' exemption from overtime compensation has already been eliminated or modified rather than acting on pure assumptions. Additionally, the Department's proposal rests on a very shaky legal foundation of alleged authority to modify the 37 year-old definition of companionship services and the application of the exemptions to third-party employed caregivers. The National Association for Home Care & Hospice (NAHC), along with its affiliate the Private Duty Home Care Association of America, represent the interests of the thousands of companies that provide home care services to nearly 12 million people of all ages annually. These businesses employ over 2 million dedicated caregivers that support the millions of spouses, parents, children, relatives, friends and neighbors that often are the primary caregivers to the home care patients and clients. It is well recognized that home care provides significant dynamic value by offering high quality care at substantially less cost than institutional care while also helping to prevent costly complications that lead to hospitalizations and other costly medical services. NAHC and the caregivers we represent share the Department's goal to provide fair and reasonable compensation to home care aides and personal care attendants. The jobs that they take on are essential, particularly as our society ages with millions of ``baby boomers.'' Also, the work that they do is hard and can only be done by dedicated individuals who understand its importance and appreciate the privilege of caring for vulnerable elderly and infirm. Specifically, NAHC does not oppose overtime compensation. However, we do not support the Department's proposal that would institute a national requirement for overtime compensation as an isolated and non- integrated element in the delivery system of home care, thereby disregarding the impact on publicly funded services, services purchased by the elderly who have limited incomes, and the workers who will experience depressed base wages and restricted working hours because employers will be unable to cover the cost of overtime with shrinking Medicaid payment rates and the inability of private purchasers to afford the care. The Department must recognize that a strategy directed at overtime compensation alone will not help home care workers. Any compensation strategy must consider and incorporate other elements as well including base wage rates, career growth opportunities, health insurance and other fringe benefits, increased payment rates from public programs such as Medicaid, and support for the elderly and infirm who cannot afford higher care rates. To push overtime compensation alone in the face of the other forces at play in this marketplace will only lead to compromised wages and restricted working hours for hardworking caregivers. This is directly evidenced by existing data, the Department's own analysis and the comments of those purporting to represent the interests of the worker. There is no need to rush the proposal to a final rule. If the Department's analysis is correct, very few workers would qualify for overtime and many of those will end up with restricted working hours as the employers respond to the new requirement by avoiding scheduling workers for more than 40 hours in a week. In terms of opening up new job opportunities, there are many current openings for home care workers and the Bureau of Labor Statistics forecast continued growth in demand. However, if the Department's view of limited impact is wrong, home care consumers, workers and public programs are put a great risk of negative consequences. Accordingly, NAHC strongly recommends that the Department initiate the necessary comprehensive research and study to determine the real impact of any changes with far less reliance on seemingly endless assumptions before proceeding. Aside from the many assumptions employed by the Department in its analysis, there are crucial undisputed facts that are relevant and material to appropriate policy relative to the companionship services and live-in exemptions: 1. All stakeholders in this matter, along with the Department itself, agree that the proposal will increase the cost of care for direct consumers as well as public programs. The disagreement on this matter is how much cost will increase. 2. All stakeholders also agree that the primary result of the imposition of an overtime compensation obligation for home care workers will be an employer's restriction in working hours to eliminate or limit the risk of an overtime cost. 3. The Department did not evaluate, through use of any specific data or analysis with targeted information, the impact of the proposals on access to and cost of live-in services for the elderly and disabled who need personal care supports for activities of daily living. Instead, the Department simply applied its analysis of hourly, part- time personal care services to full time live-in caregivers. 4. The Department focused its attention on certain public programs such as Medicare and Medicaid to the near exclusion of consideration of privately purchased home care by assuming that such services were a mere incidental part of home care. The undisputed facts and findings are combined with a series of very important, but unsubstantiated assumptions: 1. Public programs such as Medicaid will modify payment rates to ensure any increased costs triggered by the overtime compensation obligation are fully reimbursed on a timely basis. 2. The change in the overtime compensation obligation will reduce turnover of workers providing home care. 3. There will be no adverse impact on the quality of care. 4. Any restriction on work hours to control overtime costs will create new job openings that will help the nation's economy. 5. Currently overworked workers will have an improved quality of life leading to better job performance in service to the elderly and person's with disabilities. When the undisputed facts are combined with these assumptions, only one logical conclusion results: the Department must be very sure about the bona fides of the underlying rationale for its proposal and be reasonably certain about the likely impact of the rule change before proceeding. The facts alone would dictate that the rule be withdrawn or significantly redrawn. However, if the Department is also wrong in its assumptions, the consequences to workers, consumers, and public programs could be disastrous. In fact, it is the workers that are at greatest risk. NAHC strongly believes that the Department's assumptions are not well founded. First, public programs such as Medicaid are already in financial jeopardy across the country. One prime example is California where the governor has sought significant reductions in payment rates to providers of home care, both home care agencies as well as to hundreds of thousands of individual caregivers. California is far from alone with reductions in the payment rates and scope of home care benefits occurring in such other states as North Carolina and New York. Second, the Department is aware that there is a great risk of higher worker turnover as an impact of the proposed rule. At a recent ``Roundtable'' held by the Small Business Administration, the Department learned first hand from a home care agency executive that the shift to an overtime compensation obligation in Michigan in 2006 significantly increased staff turnover. Such consequence is intuitively logical when combined with the recognition that employers will restrict working hours to avoid overtime costs. Workers facing lower overall compensation will seek other employment. As such, consumers suffer because of the loss of experienced caregivers, businesses experience higher staff recruitment and training costs, and workers either lose income or the opportunity to work in home care. Third, while there is no study of the impact of an overtime obligation on quality of care, it is far from safe to assume that it will improve care. Instead, it is more likely that the increase in staff turnover will negatively impact care quality as inexperienced workers take over for departing caregivers and the assignment of multiple caregivers with restricted work hours naturally leads to deterioration in care consistency. Fourth, it is very likely that the assumption that the rule change would create new job openings is accurate. However, is that really a good impact? Currently, home care is already struggling with increasing demand for caregivers, not an oversupply of individuals looking for such jobs. The Bureau of Labor Statistics also notes that the demand for such workers will be rising exponentially as the nation ages. The shortage of workers for these jobs is not a creature of the lack of overtime compensation, it is because the work is hard and only certain people fit the demands of caregiving. These jobs pay well in excess of minimum wage, yet have more openings than jobs that pay at the minimum. Fifth, there is no data or factual support for the contention that workers are overworked and that restriction in working hours will improve quality. Unlike the experiences in hospitals and institutional care settings where nurses and other workers have been subjected to ``forced overtime'', there is no such activity ongoing in home care. A large segment of home care workers are employed on a part-time basis and employers in home care are noted for offering very flexible working hours. In fact, home care companies routinely report that it is the workers who seek more hours, not the employers demanding that the employees work more. The perfect opportunity exists for the department to test their assumptions and gain a real understanding of the impact of the proposed rule to a level of accuracy generally not available. That opportunity lies in those states that have eliminated the application of the companionship services exemption already. In fact, two states that recently did so through legislation or regulatory interpretation, Michigan and Pennsylvania respectively, would be perfect testing grounds allowing for a near contemporaneous review of the ``before and after.'' A thorough review of the consequences of the changes in those states would better inform the analysis and debate on this matter than the impact analysis undertaken to date by the department. Accordingly, NAHC recommends that the Department initiate such an analysis before proceeding. It is the best way to avoid the potentially dire consequences to all stakeholders as discussed above. Concerns on the legal validity of the proposal The substance of the proposed rule raises several important concerns about its legal validity. NAHC participated in the case, Long Island Care at Home v. Coke before the U.S, Supreme Court and the positions taken by the Department in this proposed rule change are in direct contradiction to its position advanced to the Court. Further, the proposed rule is at odds with the unambiguous language of the FLSA. Finally, the Department's initial impact analysis falls far short of requirements under the Small Business Regulatory Flexibility Act. These matters must be addressed by the Department before it can move forward with any proposal to change these rules in issue. First, the proposed redefinition of ``companionship services'' is in direct conflict with the language of the Fair Labor Standards Act as well as its legislative history. Specifically, the FLSA applies the exemption to employees providing ``companionship services for individuals who (because of age or infirmity) are unable to care for themselves.'' This exemption relates to care, not ``fellowship'' a term never referenced in the law. Specifically, 29 U.S.C. 213(a)(15) applies the exemption from overtime compensation to: ``any employee employed in domestic services employment to provide companionship services for individuals who(because of age or infirmity) are unable to care for themselves (as such terms are defined and delimited by regulations of the Secretary.'' The operative word defining ``companionship services'' is ``care'' and the focus of the care is the elderly and infirm. However, the Department proposes to minimize the ``care'' aspect of companionship services and shift the definition fully towards the concept of ``fellowship.'' In doing so, the proposal directly offends the mandate in section 213(a)(15) of the FLSA and effectively guts the usefulness of the exemption for the elderly and infirm. Fellowship is something that is not generally purchased thereby making concerns about worker compensation irrelevant. Fellowship comes by way of ones friends, family, church, clubs, fraternity or sorority, or by using Facebook. While it may be possible that a person ``buys'' a friend, it is highly unlikely that there would be an overtime need for one. More importantly, ``fellowship'' is not what elderly or infirm persons who cannot care for themselves need, it is actual care. The current rule recognizes such and has done so effectively since 1975. The proposal is in direct conflict with the statutory mandate that the Secretary define and delimit the companionship services exemption within the parameters of workers providing care to the elderly and inform, not fellowship. The legislative history fully supports the companionship services definition currently in force. By focusing on caring for the infirm and elderly in enacting the companionship services exemption, Congress targeted our nation's most vulnerable population. Improving the opportunities for the elderly and person's with disabilities to remain in their own homes, with families, avoiding more costly institutional care is the central purpose behind the exemption. See 118 Cong. Rec. 24715 (July 20, 1972) (statement of Senator Taft noting that certain domestic services are directed to caring for the elderly in their homes and preventing nursing home placement): 119 Cong. Rec. 24801 (July 19, 1973) (statement of Senator Burdick indicating the exemption relates to aged or infirm fathers and mothers who need someone ``to take care of them). Fellowship does not include the care needed to keep someone from being forced to be admitted in a nursing home. One can have 24/7 fellowship and require nursing home placement to receive the care needed to meet activities of daily living (ADLs) and instrumental; activities of daily living (IADLs). The type of companionship services that provide the opportunities to avoid institutional care are the caregiving services that have been defined as companionship services since the exemption was enacted in 1974. The passage of time and the changes in the business of providing such care have not changed those needs for care. Second, excluding employees of third-party employers from the application of the exemption is in direct contradiction to the language of the FLSA and the position advanced by the Department of Labor at the US Supreme Court in Long Island Care at Home v. Coke. The law applies the exemption to ``any employee.'' Specifically, 29 USC 213(a)(15)uses the phrase ``any employee employed in domestic services'' without any qualification as to the identity of the employer. In 1974 when the FLSA companionship services exemption was enacted, Congress well understood what legislative language was needed to exclude application of the exemption to third-party employment. In fact, Congress expressed clear awareness of a recently enacted provision in the Social Security Act that contained such language when deliberating the companionship services exemption. S. Rep. No. 93-690, 93rd Congress, 2d Session at 18. (This bill would bring under minimum wage and overtime provisions of the Act all employees in private household domestic service earning ``wages'' ($50 per quarter) for purposes of the Social Security Act, but retains a minimum wage and overtime exemption for * * * companions * * *''). Under Public Law 92-5 (March 17, 1971), Congress expanded the application of the Social Security program to domestic services, but specifically excluded taxing wages from a certain subclass of domestic services. Specifically excluded is: ``(6)(A) Remuneration paid in any medium other than cash to an employee for service not in the course of the employer's trade or business or for domestic service in a private home of the employer; (B) Cash remuneration paid by an employer in any calendar year to an employee for domestic service in a private home of the employer (including domestic service on a farm operated for profit), if the cash remuneration paid in such year by the employer to the employee for such service is less than the applicable dollar threshold (as defined in section 3121(x) of the Internal Revenue Code of 1986) for such year; (C) Cash remuneration paid by an employer in any calendar year to an employee for service not in the course of the employer's trade or business, if the cash remuneration paid in such year by the employer to the employee for such service is less than $100. As used in this paragraph, the term ``service not in the course of the employer's trade or business'' does not include domestic service in a private home of the employer and does not include service described in section 210(f)(5); * * *.'' 42 U.S.C. Sec. 209(a)(6). (Emphasis added.) Consistent with this statutory language, implementing regulations distinguish the nature of domestic services from the identity of the employer. Under 42 C.F.R. Sec. 404.1057(b), domestic services ``is work of a household nature'' including such services as those performed by cooks, waiters, butlers, maids, and housekeepers. It does not include ``services performed as a private secretary, tutor, or librarian, even though performed in the employer's home.'' 42 C.F.R. Sec. 404.1057(b). The Congressional awareness of language necessary to limit application of provisions of law related to domestic services in the home of the employer is further found in the Internal Revenue Code. The tax code is replete with references to ``domestic service in a private home of the employer'' as distinguished from the more general concept of ``domestic services.'' See, e.g., 26 U.S.C. Sec. Sec. 3510(c); 3121; 3306; 3401; and 3102. Unlike the tax code, the FLSA contains no comparable qualification. It is apparent that Congress understood the concept of ``domestic services'' to relate solely to the nature of the employee's activities. Further qualifications such as location (``in a private home'') and the identity of the employer (``* * * of the employer'') are necessary to establish intended limitations. The Department's proposal to include and limit the identity of the employer in the application of the companionship services exemption overextends the reach of the concept of ``domestic services'' under 29 U.S.C. Sec. 213(a)(15). It would be wholly illogical and inconsistent for Congress to intend different definitions of the same employment category, ``domestic services,'' under the Fair Labor Standards Act, the Social Security Act, and the Internal Revenue Code. Barnhart v. Walton, 535 US 212, 221 (2002) (The same statutory words should not be interpreted differently in closely related contexts); citing, Department of Revenue of Oregon v. ACF Industries, Inc., 510 US 332 (1994). It is plain that Congress was aware of the language needed to qualify and limit the category of employer for the companionship services exemption in 1974. Congress did not so limit its application to a distinct set of employers under the FLSA. The Department's proposal to end application of the companionship exemption to third-party employed workers violates the FLSA unambiguous mandate. The Department relied on this language in defending its current regulations at the Supreme Court in 2007. In its amicus brief in Long Island Care at Home, Ltd., et al v. Coke, the Department stated that: ``The statutory exemption applies to ``any employee employed in domestic service employment to provide companionship services.'' 29 U.S.C. 213(a)(15) (emphasis added). Congress's use of the encompassing term ``any'' is a natural read to include all employees providing such services, regardless of who employs them * * * If Congress had wanted to exclude employees of third-party employers from the exemption, it easily could have done so by expressly including a limitation based on employer status, as it has done with other FLSA exemptions * * * [The third-party employer rule] also is consistent with Congress's intent in enacting the exemption for companionship services in the first place, and it avoids the disruption to the provision of companionship services to aged and disabled individuals that would result if the regulation were invalidated * * * Allowing the exemption for all employees providing companionship services, regardless of the identity of their employer, is consistent with Congress's intent to keep such services affordable. See 119 Cong. Rec. 24,797 (1973) (statement of Sen. Dominick); id. at 24,798 (statement of Sen. Johnston); id. At 24,801 (statement of Sen. Burdick); Welding, 353 F.3d at 1217 (``Congress created the companionship services exemption to enable guardians of the elderly and disabled to financially afford to have their wards cared for in their own private homes as opposed to institutionalizing them.'') (internal quotation marks and citations omitted). This affordability concern applies regardless of whether a person needing care employs a companion directly or uses a third-party agency to obtain such services.'' The Department's only explanation for its change in position is the allegation that the businesses providing personal care and home care aide services to the elderly and persons with disabilities have grown in numbers and size. However, the businesses changes have nothing to do with the purpose behind the exemption--to keep people out of nursing homes and make home care an affordable alternative. In fact, with the growing population of people needing such services, the importance of the exemption applied as it has since 1975 has grown as well. There is no indication in 213(a)(15) that Congress intended the companionship services exemption to apply only to the elderly and infirm that have the wherewithal and financial capabilities to take on the difficult tasks required of employers. However, that is the direct consequence of the Department's proposal. Those using companionship services who do not want the cost of overtime compensation must take on the complex role of an employer with all of its administrative obligations and financial liabilities. In doing so, the person gains the benefit of the exemption but also loses the benefits of state- designed consumer protections that address everything from worker background checks and competencies to professional oversight. The Department's proposal sacrifices the option of a third-party agency model of care for consumers to bring the illusion of higher compensation to workers. Congress stuck a conscious balance between the consumers and the workers and did not authorize the Department's proposal to restrict the exemption to direct employees of the consumer. Third, the proposed rules have existed essentially with identical standards since the original rulemaking proceeding in 1975. Congress has had many opportunities to change the law in line with the Department's proposal. Where Congress does not find sufficient reason to change the law over 36 years, the legal validity of the current proposal is called into serious question. Since the ruling of the U.S. Supreme Court in Coke, Congress has had several opportunities to enact legislation that would achieve the changes that the Department now proposes in a regulation. See, Fair Home Health Care Act, H.R.3582; Fair Home Health Care Act of 2007, S.2061; Direct Care Job Quality Improvement Act of 2011, S.1273; Direct Care Job Quality Improvement Act of 2011, H.R.2341; Direct Care Workforce Empowerment Act S.3696; Direct Care Workforce Empowerment Act, H.R.5902. Each of these efforts were attempts to modify 213(a)(15) in a manner virtually identical to the Department's proposed rule change. Each would have eliminated the longstanding application of the companionship services exemption to third-party employed workers. Each would have eliminated the application of the exemption to any worker who was employed on more than a casual basis. These legislative efforts never cleared the respective house of Congress let alone the Congress overall. In fact, each had only a small numbers of cosponsors with S. 2061 getting the high-water mark in the Senate at 11 and HR 2341 garnering 35 in the House. The Department's complete turnaround in its interpretation of the law as proposed has doubtful validity. It's very clear previous legal position on the FLSA companionship services exemption is totally inconsistent with the present proposal. Also, Congress's clear unwillingness to change the 37 year-old rule defining and delimiting the Department's exemption is a strong indicator of the validity of the existing FLSA interpretation and application. Most importantly, the fact that the Department's rationale for keeping the rule as is in 2007 still exists today--keeping the elderly and persons with disabilities out of institutional care and in their own homes. Finally, the analysis by the Department of Labor regarding the likely impact of the proposed rules falls very far short of the analysis required under the Small Business Regulatory Flexibility Act, the Paperwork Reduction Act, and Executive Orders 12886 and 13563. While the Department offers a lengthy impact report, it has several major failings at its core. Given the potential impact of the proposal, the Department should be held to a very high standard of accuracy and completeness in its impact analysis. The analysis misses completely one of the most significant forms of home care--privately purchased personal care. It is estimated that several million elderly and persons with disabilities use such care through 20,000 companies with an estimated $25-30 billion in annual expenditures. The Department and others contend that Medicare and Medicaid make up 89% of total spending on personal care services. However, Medicare spending on personal care services, as part of a skilled care home health benefit, is less than $1 billion annually. Medicare requires that the patient be homebound and in need of intermittent care. 42 U.S.C. 1395f(a)(C). If qualified, the person can receive part-time care from a home health aide, 42 U.S.C. 1395m. That care can include some personal care, but also includes assistance with medication, non- complex wound care, and therapy exercises from a certified home health aide in contrast to a personal care attendant. Medicare home health aides are subject to detailed training and competency testing requirements. 42 CFR 484.32. Personal care is only one part of their functions. As such, the application of the $19 billion in total Medicare home health spending to the analysis of the impact of the Department's proposal is wholly misplaced. Medicaid spending on personal care and home care aides is approximately $25 billion. However, it is difficult to determine exactly how much of such care fits within the current ``companionship services'' definition. Assuming that all of such Medicaid spending is on care that could be classified as ``companionship services (an assumption that is a very generous one in this matter), it becomes apparent that the Department examined the wrong business in its impact evaluation. It should have looked mostly at private pay personal care and Medicaid while ignoring Medicare data. All told, it is estimated that private pay personal are services represent nearly half of all spending on care that could be classified as ``companionship services'' under the current rule. Most of the remaining comes from public programs such as Medicaid and the Older American's Act. Only an incidental portion comes by way of Medicare. A compliant impact review would necessitate a thorough examination of private pay home care. The Department's impact analysis is also devoid of any evaluation of live-in services. This unique segment of home care is virtually all on a private pay basis. Medicaid is a payer of some live-in care, but most states do not provide such a level of coverage. The impact on live-in care and caregivers cannot be simply assumed by using Medicare data or even the limited, but unrelated data on Medicaid home care services. It is a service that is wholly different from most public program home care. Live-in care has elements that make for obvious distinctions in terms of its nature and its ``compensation'' to workers. The live-in worker generally has significant free time and is not actually working 24/7. Also, the live-in has a wide variety of responsibilities, often including personal care when working as a caregiver rather than a maid or housekeeper. Another significant factor is that the live-in worker gets housing and even meals in some instances as part of their compensation---elements that are not calculated into the determination of wage levels in the Department's proposal. That means that the wages and the value of housing and meals combined far exceed minimum wage levels. The Medicaid beneficiaries that receive covered live-in services are quite varied and unique in their needs and circumstances. With the Department's proposal, these individuals are at serious risk of losing all care in the community setting. These individuals include college students with Medicaid paid ``roommates'' who also attend college. They include individuals who work and take their caregivers to work with them. They are individuals who can have their needs met during the day, but need an overnight live-in to address intermittent needs. The Department's impact analysis indicates clearly that these consumers, the workers who care for them, and the programs that support them were not examined or reviewed with any specificity. The utter absence of sufficient evaluation of the proposal's impact on live-in services warrants an immediate withdrawal of the proposal. If the Department wishes to proceed with its live-in rule change, it should start at ``square one'' and comprehensively analyze the employment circumstances and the effect that any change will have on all stakeholders. Simply applying an analysis that is inadequate in relation to hourly care to the highly distinct live-in care is not acceptable or compliant with the Department's obligation. NAHC, along with the National Private Duty Home Care Association, conducted a study (Appendix 1) of the impact of the Department's proposal. This nationwide survey, including private pay home care and live-in services providers, indicates the following adverse impacts: 1. Moderate to significant increases in care costs 2. Restrictions in overtime hours to the detriment of the workers overall compensation 3. Loss of service quality and continuity 4. Increased costs passed on to the patients and public programs that would decrease service utilization, increase unregulated ``grey market'' care purchases, and increase institutional care utilization rather than absorbing and covering the higher cost of care. The survey protocols began with the identification of the universe of survey targets. NAHC and NPDA did not limit the survey universe. Instead, through various communications from both NAHC and NPDA, as well as industry publications and state home care associations, the survey was open to all interested home care companies. For your reference, the survey questions are in Appendix 2. As you will note in reviewing the survey questions, the survey was intended to elicit responses covering the broad range of potential answers as well as leaving an open input opportunity for the respondents to include narratives in the event that the respondent had an answer that was not on the listed options or wished to elaborate on his/her answer. For example, with respect to the question on the impact of overtime pay on quality of care, response options included: no impact; minimal deterioration; moderate deterioration; significant deterioration; minimal improvement; moderate improvement; significant improvement; and unsure. This is a very typical survey method wherein respondents have the full range of response options to avoid any survey bias. For further reference, the entire survey response results are found in Appendix 3. These results are unedited and raw, without any analysis or editorial review. The results raise serious questions about the Department's impact analysis and findings. In fact, these survey results depict an entirely different industry that the one displayed in the NPRM impact analysis. The main reason for the differences is that the NPRM analysis focused primarily on Medicare, Medicaid and other public programs to the near exclusion of the private pay side of home care services--a large and important segment of ``companionship services'' and live-in care. Another reason for the differences is that the survey study is real time and not reliant on the vagaries of non- uniform publicly reported data. Instead, it focused on impact directly, going to the first-line source of the most pertinent information--the employers of caregivers. In addition, it provides information about the actual, rather than forecasted impact from the states where overtime compensation is already a requirement. This information is extraordinarily useful in forecasting the impact of the Department's proposal. The study demonstrates that the potential adverse impact on patients, workers, public programs, and the business that employ caregivers is real and significant. While we do not take the position that the study is the ``be all'' of impact analyses, the insights gained from this study demonstrate that the Department's data sources and analytic methodology fall short of the comprehensive and accurate review of the potential impact of the proposed rule. Further, those insights depict consequences that warrant additional review and evaluation prior to the advancement of any changes in the longstanding standards under the companionship services exemption. These consequences are intuitively sound and reasonably foreseeable given the overall market context of home care. In addition, the proposal would adversely affect too many stakeholders in home care to ignore and move on to a final rule at this point. Higher care costs, restricted working hours for caregivers, reduced quality of care, and increased demands on financially fragile public programs should not be the intended results of a rule change. Further, an analysis by Navigant Economics confirms that the Department fell far short of the depth and accuracy needed to produce the mandated impact analysis sufficient to protect the public from harmful policy changes. Navigant Economics uncovered essential flaws and weaknesses in the Department's analysis, indicating that it would be prudent to re-initiate a comprehensive review before proceeding further with the proposed rule change. The report, ``Estimating the Economic Impact of Repealing the FLSA Companion Care Exemption,'' by Jeffrey A. Eisenbach, PhD. And Kevin W. Caves, PhD., (hereinafter ``Navigant Report'') is a significant contribution to the dialogue on the companionship services and live-in issues. The report can be found at: PhD., (hereinafter ``Navigant Report'') is a significant contribution to the dialogue on the companionship services and live-in issues. The report can be found at: PhD., (hereinafter ``Navigant Report'') is a significant contribution to the dialogue on the companionship services and live-in issues. The report can be found at: While we suggest that the Department carefully review the entire Navigant Economics report, several highlights are worthy of note. Navigant concludes that the Department's impact analysis: 1. ``systemically understates the costs of the proposed rules while overstating potential benefits. Navigant Report at 12. 2. ``assumes away or understates several important types of compliance costs.'' Navigant Report at 15. 3. ``understates deadweight loss (a) by assuming, explicitly and incorrectly, that elasticity of demand for companionship labor is extremely low; and (b) by implicitly and incorrectly assuming that elasticity of demand for companionship services is zero (perfectly inelastic). Navigant Report at 15-16. 4. fails ``to distinguish between live-in care and hourly care [causing] it to under-estimate the overtime cost burden for the live-in industry by roughly a factor of eighteen.'' (footnote omitted) Navigant Report at 20. 5. ignores real and significant quasi-fixed costs, regulatory familiarization and recordkeeping costs, and added travel costs Navigant Report at 23-28. 6. ``ignores altogether the disproportionate impact of the repeal on the market for live-in care.'' Navigant Report at 28-31. 7. fails to recognize that the home care industry ``is far more responsive to changes in Labor costs than the PRIA assumes * * * the demand for companionship care workers is found to be elastic, implying that a one percent increase in labor costs causes employment to decline by more than one percent, causing aggregate worker compensation to decline.'' Navigant Report at 43. 8. ``dismisses concerns about continuity of care based on little more than speculation based on studies showing the impact of long hours on medical error rates.'' Navigant Report at 48-49. 9. fails to recognize that, ``It is certain [with the proposed rule changes] that the demand for institutional care will increase, perhaps substantially.'' Navigant Report at 49. 10. fails to consider viable alternatives such as continuing to allow individual states to regulate minimum wage and overtime provisions in relation to companionship services and fails to gather the necessary data to demonstrate the value of the proposed changes as required under OMB Circular A-4. Navigant Report at 51-53. The Navigant Report adds to the body of evidence demonstrating that changes to the longstanding FLSA rules on companionship services and live-in care are not ripe for action. The layers of assumptions and impact speculation offered by the Department fall far short of the reliability level sufficient to justify this significant policy change. There is too much at risk to act hastily particular when those risks are shared by workers, consumers, and payers alike. It is even of greater concern when the consumers are the most vulnerable of our citizens, the workers already have compensation concerns, and the public programs financing the care are obviously very fragile. While the Navigant Report highlights major weaknesses in the PRIA as it relates to companionship care, the surprising changes regarding live-in services deserve special notice. Unlike the companionship services exemption, the separate live-in exemption has not had over a decade of attention by the Department or the stakeholders. The data on companionship services is weak at best and it is necessary that there be original, ground up granular research to determine if changes are necessary and warranted with its rule. However, the live-in care impact review falls very far short of the companionship rule analysis. The reason is obvious: the Department did not look at live-in services beyond assuming that the impact is negligible. If it had it would quickly realize that there is no public data to determine impact. The proposal on the live-in rule should be withdrawn until the Department has sufficient information to understand that separate industry and the potential impact on consumers and workers. Reports of high profit margins are wholly erroneous At a March 20, 2012 hearing before the House Subcommittee on Worker Protections, the Department's witness, Nancy C. Leppink, Deputy Administrator, Wage and Hour Division, and the Ranking Member of the subcommittee, Hon. Lynn Woolsey, indicated that home care companies can absorb any costs associated with the proposed rule, including overtime costs, because the companies have generally high profit margins of 30- 40%. It appears that such figure came from the December 2010 Franchise Business Review article entitled, ``Senior Care and Home Healthcare Franchises. However, that article referenced ``gross Profit Margins'' not net profit margins. The concepts are entirely distinct with net margins being the metric that sets out profit after all costs. Gross margins look only at direct costs and exclude many of the natural and necessary costs of running any business. It is clear that the net profit margins of home care companies are nowhere near the claimed levels. There are five public companies providing home care services that encompass to varying degrees the personal care services that potentially could be classified as companionship services under the existing rule. They include Addus, Almost Family, Amedisys, Gentiva, and LHC Group. Those companies' net margins as of March 19, 2012 range from 1.02 to 7.11 percent. http://biz.yahoo.com/p/526qpmd.html. In addition, the company that is presented by some proponents of the proposed rule change, Addus, reported a December 31, 2011 net profit margin of 3.64 percent. http://ycharts.com/companies/ADUS/profit-- margin. It should be noted that these five companies represent just a small slice of the overall home care providers. However, their financial performance fits within the range of the rest of the industry. NAHC maintains a database on cost reports submitted to Medicare annually by home health agencies across the country. These cost reports include data on both Medicare and non-Medicare revenues. These cost reports do not include what is known as hospital-based home health agencies as their filings do not allow for home care specific analysis on overall home care margins. With 6604 cost reports encompassing 2010 filings, the overall profit margin average is 3.15%. This margin represents a total of $48,644,977,360 in revenues with more than $34 billion of that from non-Medicare sources. These data do not evidence a provider group with exorbitant profit margins sufficient to absorb added costs of providing care. The 30-40% margin reference expressed by the Department comes from Gross Margins which have nothing in common with Net Margins. The Medicaid payment rates for personal care services further tell the real story on the ability of providers to bear the additional costs of overtime or alternative costs of hiring and training additional workers if care hours are restricted to avoid overtime costs. For example, in Texas, the state pays $10.41-11.56 per hour depending with providers obligated to pay attendants 90% of the designated labor portion which ranges from $8.34-9.49 per hour. In Georgia, the personal care service rate is $9.00 per hour. South Carolina offers $11.40 per hour with neighboring North Carolina at $13.80. Ohio provides $17.12 per hour, but rates were decreased by 3% in July 2011, an example of a national trend. These payment rates are far lower than the Department has understood and certainly do not support any claim of high profit margins for the businesses that provide the care to elderly and infirm citizens. Nor do these rates and the state trends downward on rates support a contention that additional costs can be absorbed without adverse consequences to workers and clients alike. Simply put, the Department's numbers are wrong and actual margins in home care fall far short of permitting additional costs to be absorbed without adverse consequences to patients/clients, workers, public funding programs, and overall business viability. Recommendations/alternatives NAHC recommends that the Department of Labor consider the following alternatives to the proposed rule. 1. Withdraw the NPRM and initiate original and focused research on the impact of any changes to the companionship services and live-in exemption rules before proceeding further. 2. Allow individual states to determine what changes fit best for their individual home care market in order to best fit the employment marketplace, the state-specific structures regulating the quality of home care services, and the state's Medicaid program as the primary public payer of personal care services. 3. Separate the companionship services exemption policy change proposal from the live-in exemption proposal, withdrawing the live-in proposal and proceed with separate and comprehensive analysis on live- in impact. 4. Develop a home care specific minimum wage and overtime compensation policy that addresses the unique working hour arrangements such as shift care, hourly service visit-oriented care, intermittent work days, and ``work weeks'' that are not a standard 7 days. This is similar to the approach taken in other health care sectors such as hospitals and nursing homes. 5. Examine state-specific approaches to overtime compensation in home care that can achieve a reasonable balance between the interests of consumers and workers. This would include overtime triggered after a certain point in the day (MN) and overtime connected to minimum wage levels rather than actual hourly wages (NY). 6. Allow daily compensation arrangements, without hourly time/ function logs as proposed, between live-in workers and their clients to take into consideration issues of sleep time, breaks, meal time and the cost of such to the client and value to the worker. 7. Withhold issuance of any final rule that requires overtime compensation to companions (as currently defined) until states revise Medicaid payment models to address the increase in costs to assure that workers are allowed to work into overtime to qualify for the added compensation. 8. Ensure even application of any changes in the companionship services and live-in exemption rules to all workers providing personal care services to the elderly and disabled including agency workers, individual providers working in consumer directed care programs under Medicaid where the employer's identity is unclear, and workers directly employed by consumers and their families. This will prevent a shift to ``grey market'' unregulated providers of care. 9. Provide sufficient lead time to adjust to the new obligations. Employers of home care aides will require at least one year to address the myriad of issues presented by the proposed rule if care disruptions are to be avoided. The companies will need to modify staff scheduling, hire and train additional staff, and work with Medicaid rate setters to attempt to secure payment rate adjustments. 10. Maintain an exemption from overtime compensation while requiring payment of minimum wages. Conclusion Thank for the opportunity to submit these comments. NAHC stands ready to work with the Department and all other stakeholders to devise a reasonable strategy on worker protections for those that take on the essential task of caring for our most vulnerable citizens. Very truly yours, William A. Dombi, Vice President for Law. ______ appendix 1 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] appendix 2 This is a survey on the impact or potential impact of requiring payment of overtime compensation to personal care attendants and home care aides. Under the federal Fair Labor Standards Act, ``companionship services'' are exempt from minimum wage and overtime pay requirements. In many circumstances, the work done by personal care attendants and home care aides is considered ``companionship services'' under this law. States can drop the exemption and nearly half the states have done so. Presently, the US Department of Labor has developed proposed changes in the existing rule defining companionship services and its application to companies that employ workers providing home care. It is expected that the proposal would significantly alter the long-standing definitions in a manner that would mean that the exemption is no longer applicable to home care employees. As used in this survey, ``companionship services'' includes personal care to the elderly and disabled. Housekeeping and chore services are included as companionship services provided that those services are less than 20% of the total time worked by the employee. ``Companionship services'' may be provided by personnel operating under various labels such as personal care attendant, home care aide, home health aide and others. For purposes of the overtime exemption, it is the functions of the worker that matter, not the job label. 1. In which state(s) does your company provide home care? List all states applicable 2. Please list all the types of services provided by your company a. Private pay personal care b. Medicaid personal care services c. Medicaid home and community-based waiver services d. Older Americans Act personal care (Area Agencies on Aging services) e. Medicare/Medicaid home health services f. Medicare/Medicaid hospice g. Commercial insurance paid services h. Veteran's Administration paid home care 3. What is the annual home care revenue for your company? a. Under $1M b. $1-5M c. $5-10M d. $10-20M e. Over $20M 4. What percentage of your revenue comes from personal care services and home health aide services regardless of payment source? a. None b. 0-20 c. 21-40 d. 41-60 e. Above 60 f. Unsure 5. Are companionship services exempt from overtime wages in your state? a. Yes b. No c. Unsure 6. What percentage of your workforce provides companionship services? a. None b. 0-20 c. 21-40 d. 41-60 e. Above 60 f. Unsure 7. What percentage of your employees that provide companionship services provide live-in services? a. None b. 0-20 c. 21-40 d. 41-60 e. Above 60 f. Unsure 8. What percentage of your companionship services are covered for payment under a public program, such as Medicare, Medicaid, the Veteran's Administration, or Older Americans Act? a. None b. 0-20 c. 21-40 d. 41-60 e. Above 60 f. Unsure 9. What percentage of your companionship services are paid for privately, by the individual client/patient, family or through a commercial insurance plan? a. None b. 0-20 c. 21-40 d. 41-60 e. Above 60 f. Unsure 10. What percentage of your employees who provide companionship services work over-time? a. None b. 0-20 c. 21-40 d. 41-60 e. Above 60 f. Unsure 11. Do you pay overtime wages to employees that provide companionship service whether required or voluntary? a. Yes--required (proceed to 12) b. Yes---voluntary (proceed to12 ) c. No (proceed to 21 ) d. Unsure (END of SURVEY) 12. Do you pay employees that provide live-in companionship services wages for sleep hours? a. Yes b. No (proceed to 14) c. Unsure (proceed to 14) 13. Do you factor in sleep time hours for employees that provide live-in companionship services when determining whether overtime wages are paid? a. Yes b. No c. c. Unsure 14. Does paying overtime wages impact your business costs? a. Yes (proceed to 15) b. No (proceed to 16) c. Unsure (proceed to 16) 15. How much of an impact does paying overtime for companionship services have on your agency's business costs? a. No change in business costs b. Minimal increase c. Moderate increase d. Significant increase e. Decrease costs f. Unsure 16. Does paying overtime wages adversely impact the quality of care your agency provides to the clients/patients you serve? a. Yes (proceed to 17) b. No (proceed to 19) c. Unsure 17. How much of an impact does overtime pay for companionship services have on the quality of care to the clients/patients you serve? a. No impact b. Minimal deterioration c. Moderate deterioration d. Significant deterioration e. Minimal improvement f. Moderate improvement g. Significant improvement h. Unsure 18. What impact does paying overtime wages have on the quality of your services? (check all that apply) a. lower staff retention b. higher staff retention c. poorer staff competencies d. better staff competencies e. lower staff educational levels f. higher staff educational levels g. poorer consistency and continuity of care h. improved consistency and continuity of care i. Other 19. What business adjustments have you made in response to paying overtime wages to employees who provide companionship services? (check all that apply) a. Increased billing rates to clients/patients b. Hired additional employees to provide companionship services to reduce or eliminate need for overtime hours c. Reduced the number of hours for employees providing companionship services to avoid the payment of overtime d. Scale back offering companionship services e. Assign additional employees to individual clients/patients receiving companionship services f. Increased human resources costs due to a greater need for staff g. Increased staff training costs h. No adjustments made i. Other (please explain): 20. What changes have you observed in your market since the payment of overtime for companionship services was implemented? a. Fewer clients/patients seek companionship services through an agency b. Employees providing companionship services work for more agencies to obtain their desired number of hours per week c. Employees providing companionship services report less satisfaction with their work schedule d. No change e. More clients/patients seek companionship services through an agency f. Employees providing companionship services work for fewer agencies to obtain their desired number of hours per week g. Employees providing companionship services report more satisfaction with their work schedule h. I don't remember a time when the payment of overtime for companionship services wasn't required If you answered Q 19 and 20 this is the end of the survey. 21. Do you pay employees that provide live-in companionship services wages for sleep hours? a. Yes b. No c. Unsure 22. Do you expect that paying overtime wages would impact your business costs? a. Yes (proceed to 22) b. No (proceed to 23) c. Unsure 23. How much of an impact would paying overtime wages for companionship services have on your agency's business costs? a. No change in business costs b. Minimal increase c. Moderate increase d. Significant increase e. Decrease costs f. Unsure 24. Do you expect that paying overtime wages would impact the quality of care your agency provides to the clients/patients you serve? a. Yes (proceed to 25) b. No (proceed to question 26) c. Unsure 25. How much of an impact would you expect overtime pay for companionship services would have on the quality of care to the clients/patients you serve? a. No impact b. Minimal deterioration c. Moderate deterioration d. Significant deterioration e. Minimal improvement f. Moderate improvement g. Significant improvement h. Unsure 26. What impact would you expect paying overtime wages would have on the quality of your services? (check all that apply) a. lower staff retention b. poorer staff competencies c. lower staff educational levels d. poorer consistency and continuity of care e. higher staff retention b. better staff competencies c. higher staff educational levels d. improved consistency and continuity of care e. Other 27. What business adjustments would you expect to make in response to paying overtime wages to employees who provide companionship services? (check all that apply) a. Increased billing rates to clients/patients b. Hire additional employees to provide companionship services to reduce or eliminate need for overtime hours c. Restrict overtime hours for employees providing companionship services d. Scale back offering companionship services e. Assign additional employees to individual clients/patients receiving companionship services f. Increase human resources costs due to due to a need for additional employees g. h. Increase staff training costs due to a need for additional employees i. No adjustments made j. Other (please explain): 28. What impact on the communities you serve would you expect from paying overtime wages for companionship services? a. Fewer clients/patients able to afford care b. Less work available for employees who provide companionship services c. No Impact ______ appendix 3 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] [Whereupon, at 11:40 a.m., the subcommittee was adjourned.]